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Economy in Brief

U.S. CPI & Core CPI Edge Higher
by Tom Moeller  October 11, 2018

Consumer price inflation remained subdued last month due to broad-based weakness. The CPI rose 0.1% (2.3% y/y) during September following two straight 0.2% gains. The increase fell short of expectations for a 0.2% gain in the Action Economics Forecast Survey. The CPI excluding food & energy also inched up 0.1% (2.2% y/y) for the second straight month, following three consecutive months of 0.2% increase. A 0.2% rise had been expected.

Weakness in last month's CPI increase was led by a second straight 0.3% monthly decline (-0.3% y/y) in goods prices excluding food & energy. Used car & truck prices led the shortfall as they plummeted 3.0% (-1.5% y/y). New car & truck prices eased 0.1% (+0.5% y/y). Continuing to the downside were recreation goods prices by 0.6% (-3.3% y/y). A 1.9% decline in television prices (-18.6% y/y) paced the shortfall. Also weak were sporting goods prices which fell 0.9% (-0.5% y/y). Medical care product prices eased 0.1% (+0.7% y/y), the smallest of three consecutive monthly declines. Elsewhere, leading the increases in pricing power was a 0.9% rise (-0.6% y/y) in apparel prices which followed four straight months of decline. Home furnishings prices gained 0.2% and were unchanged y/y, while appliance costs improved 0.2% (2.9% y/y). Tobacco prices gained 0.3% (3.2% y/y).

Nonenergy service price inflation held steady at 0.2% (3.0% y/y). Recreation services prices strengthened 0.7% (1.9% y/y), the largest increase since February 2017. Transportation services prices increased 0.5% (4.0% y/y) as car & truck rental costs rebounded 2.2% (-1.8% y/y) after a sharp August decline. Public transportation prices rose 0.4% (-0.2% y/y). Shelter prices increased 0.2% (3.3% y/y) as the owners' equivalent rent of primary residences rose 0.2% (3.3% y/y), down versus the 0.3% increases in each of the prior six months. Rents also increased a lessened 0.2% (3.6% y/y). The cost of medical care services rose 0.2% (2.0% y/y). Tuition costs and other schools fees & child care inched 0.1% higher (2.6% y/y).

Countering these increases was a 0.5% decline (+4.8% y/y) in energy prices which followed a 1.9% rise. The decline was led by a 1.7% drop (-1.2% y/y) in natural gas prices. Electricity prices also fell 0.5% (-1.2% y/y). Gasoline prices eased 0.2% (9.1% y/y) after a 3.0% rise, and the cost of fuel oil improved 0.3% (23.4% y/y) following a 2.2% rise.

Food prices held steady in September (1.4% y/y) after two straight 0.1% gains. Cereal & bakery product prices strengthened 0.6% (0.7% y/y). Nonalchoholic beverage prices rose 0.6% both m/m and y/y. Egg prices declined 4.1% (+10.1% y/y), down for the fifth straight month. Meat, poultry and fish prices fell 0.8% (-0.1% y/y) after a 0.2% rise, while dairy product prices eased 0.3% (unchanged y/y) following a 0.1% uptick. Fruit & vegetable prices declined 0.5% (+0.5% y/y) after a 0.3% fall.

The modest gain in consumer prices caused real average hourly earnings to increase 0.3% (0.5% y/y), the strongest gain in six months.

The consumer price data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Consumer Price Index, All Urban Consumers (% chg) Sep Aug Jul Sep Y/Y 2017 2016 2015
Total 0.1 0.2 0.2 2.3 2.1 1.3 0.1
Total less Food & Energy 0.1 0.1 0.2 2.2 1.8 2.2 1.8
  Goods less Food & Energy -0.3 -0.3 0.1 -0.3 -0.7 -0.5 -0.5
  Services less Energy 0.2 0.2 0.3 3.0 2.7 3.1 2.6
 Food 0.0 0.1 0.1 1.4 0.9 0.3 1.9
 Energy -0.5 1.9 -0.5 4.8 7.9 -6.6 -16.7
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