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Economy in Brief

U.S. CPI Edges Higher; Core Prices Accelerate Y/Y
by Tom Moeller  September 12, 2019

The Consumer Price Index rose 0.1% during August (1.7% y/y) following a 0.3% July increase. The rise matched expectations in the Action Economics Forecast Survey. The CPI excluding food & energy increased 0.3% for the third straight month. A 0.2% gain had been expected. The y/y rise accelerated to 2.4%, its strongest gain since 2008.

Core goods prices excluding food & energy improved 0.2% as they did in July. The y/y rise accelerated, however, to 0.8% from the low of -1.0% during October 2017. Used car & truck prices surged 1.1% (2.1 % y/y), strong for the third straight month. Education & communications goods prices strengthened 0.9% (-3.4% y/y) after a 1.1% rise. Medical care goods prices improved 0.3% (0.1% y/y), the strongest rise in four months. Recreation goods prices improved 0.2%. Their -0.9% y/y change compared to -4.0% y/y in October 2016. Apparel prices also gained 0.2% after a 0.4% rise. Their y/y gain accelerated to 1.0% from -3.1% just three months ago. Prices of new vehicles eased 0.1% (+0.2% y/y), off slightly for a second straight month. Household appliance prices slipped 0.3% and the 0.1% y/y rise compared to 6.8% y/y just six months ago. Furniture & bedding prices weakened 1.1%. They strengthened 1.4% y/y after y/y price deflation from 2013 to the middle of last year.

Services prices increased 0.3% (2.9% y/y) for the third consecutive month. The cost of shelter rose a weakened 0.2% (3.4% y/y). The owners' equivalent rent of primary residence rose 0.2% and a steady 3.4% y/y. Rents of primary residences also gained 0.2% (3.7% y/y) after a 0.3% rise. The cost of lodging away from home weakened 2.1% (+2.0% y/y), the third decline in four months. Medical care services prices strengthened 0.9%. The 4.3% y/y rise was increased from 1.6% two years ago. Recreation services costs surged 0.6% (2.2% y/y) after declining in two of the previous three months. Education & communication costs eased 0.1% and rose a lessened 1.0% y/y. The cost of public transportation increased 1.2% and by an increased 1.5% y/y.

Food prices were unchanged for the third straight month (+1.7% y/y) in August. Dairy product prices rose 0.2% (1.1% y/y) but meat, poultry & fish prices fell 0.5% (+0.4% y/y). Fruit & vegetable prices declined 0.5% (+0.3% y/y) while cereal & bakery product costs eased 0.3% (+1.2% y/y). Egg prices declined 2.6% (-15.9% y/y). Nonalcoholic beverage prices were stable (1.9% y/y), but have been declining y/y since early 2018.

The cost of energy declined 1.9% (-4.4% y/y) and reversed July's 1.3% rise. Gasoline prices fell 3.5% (-7.1% y/y), the third decline in four months. Fuel oil prices eased 0.9% (-8.4% y/y), also the third decline in four months. Electricity prices fell 0.3% (-0.1% y/y) after a 0.6% rise. To the upside, prices for natural gas improved 0.1% but declined 3.5% 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.7y

Consumer Price Index, All Urban Consumers (% chg) Aug Jul Jun Aug Y/Y 2018 2017 2016
Total 0.1 0.3 0.1 1.7 2.4 2.1 1.3
Total less Food & Energy 0.3 0.3 0.3 2.4 2.1 1.8 2.2
  Goods less Food & Energy 0.2 0.2 0.4 0.8 -0.2 -0.7 -0.5
  Services less Energy 0.3 0.3 0.3 2.9 2.9 2.7 3.1
 Food -0.0 0.0 0.0 1.7 1.4 0.9 0.3
 Energy -1.9 1.3 -2.3 -4.4 7.5 7.9 -6.6
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