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Economy in Brief

U.S. CPI Increases Minimally; Core Price Index Strengthens
by Tom Moeller  July 11, 2019

Overall retail pricing power remained muted last month, but strength emerged in core prices. The Consumer Price Index edged 0.1% higher (1.6% y/y) during June, the same as it did in May. These remained the smallest increases since January. The rise compared to zero change expected in the Action Economics Forecast Survey. Strengthening, however, was the increase in the CPI excluding food & energy. It rose 0.3% (2.1% y/y), the largest gain since January 2018. It followed four consecutive months of 0.1% gains. A 0.2% rise had been expected.

Core goods prices increased 0.4% (0.2% y/y) after four straight months of decline. The rise was led by a 1.1% gain (-1.3% y/y) in apparel prices after they had held steady for three straight months. Furniture & bedding costs strengthened by 0.9% after a 0.7% rise. The 3.1% y/y increase contrasted with y/y price deflation as of August of last year. Appliance prices increased 0.4% (2.6% y/y) after two months of even stronger gains. Sporting goods prices rose 0.3% (0.7% y/y) which followed a 0.1% uptick. New vehicle prices rose a minimal 0.1% (0.6% y/y) for the third straight month. Strength was logged, however, by used car & truck prices which bounced back 1.6% (1.2% y/y) after falling in five of the prior six months. Price declines in several other sectors offset these increases. Education & communication goods prices fell 0.8% (-6.1% y/y) reflecting a 1.2% decline (-7.3% y/y) in prices of information technology products. Medical care goods prices fell 0.2% (-1.5% y/y) after a 0.4% decline. Recreation goods prices eased 0.1%, although they rose a firm 3.6% y/y.

Service prices rose 0.3% in June (2.8% y/y) after a 0.2% gain. Medical care services prices strengthened 0.4% (2.8% y/y) after a 0.5% rise. Shelter costs rose 0.3% (3.5% y/y) after improving 0.2%. Rents of primary residences strengthened 0.4% (3.9% y/y) and the owners' equivalent rent of primary residences gained a steady 0.3% (3.4% y/y). The cost of lodging away from home declined 0.6% (+3.9% y/y). Transportation services prices held steady (0.9% y/y) after two months of 0.1% uptick. The cost of public transportation fell 1.1% (+1.1% y/y) following a 1.9% rise. Recreation services prices declined 0.2% (+1.7% y/y), off for the second straight month. Education & communication service costs increased a steady 0.2% (1.2% y/y) as tuition costs edged 0.1% higher (3.3% y/y).

Lower energy prices held back the overall gain in the CPI with a 2.3% drop (-3.4% y/y). It was the second month of decline. Weakness was led by a 3.6% fall (-5.4% y/y) in the cost of gasoline and a 2.3% drop (-5.6% y/y) in fuel oil prices. Electricity prices fell 0.8% (-0.3% y/y) as they did in May while natural gas prices eased 0.3% (-2.1% y/y), down for the sixth straight month.

Food prices were unchanged last month (1.9% y/y) after a 0.3% increase. Nonalcoholic beverage prices declined 0.6% (+2.3% y/y) after a 1.2% strengthening. Meat, poultry & fish prices fell 0.7% (+1.0% y/y) and offset the May increase, while egg prices fell 2.0% (-12.4% y/y). Fruit & vegetable prices were off 0.5% (+1.0% y/y), down for the third straight month. Cereal & bakery product prices moved 0.6% lower (+1.2% y/y) and countered the prior month's rise. Offsetting these declines, dairy prices strengthened 0.3% (0.6% y/y) and prices for food away from home rose 0.3% (3.1% y/y).

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) Jun May Apr Jun Y/Y 2018 2017 2016
Total 0.1 0.1 0.3 1.6 2.4 2.1 1.3
Total less Food & Energy 0.3 0.1 0.1 2.1 2.1 1.8 2.2
  Goods less Food & Energy 0.4 -0.1 -0.3 0.2 -0.2 -0.7 -0.5
  Services less Energy 0.3 0.2 0.3 2.8 2.9 2.7 3.1
 Food 0.0 0.3 -0.1 1.9 1.4 0.9 0.3
 Energy -2.3 -0.6 2.9 -3.4 7.5 7.9 -6.6
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