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Economy in Brief

U.S. Consumer Price Index Increase Exceeds Expectations during August
by Tom Moeller  September 11, 2020

• Core goods prices surge.

• Services prices moderate.

• Energy prices jump.

Retail pricing power continued to improve last month. The Consumer Price Index increased 0.4% (1.3% y/y) during August following a 0.6% rise in July. The rise compared to expectations for a 0.3% increase in the Action Economics Forecast Survey. The CPI excluding food & energy also rose 0.4% (1.7% y/y) last month after increasing 0.6% in July. It compared to expectations for a 0.3% rise.

Goods prices excluding food & energy strengthened 1.0% (0.4% y/y) after a 0.7% increase in July. The rise was led by a 5.4% strengthening (4.0% y/y) in used car & truck prices. New vehicle prices, however, remained steady (-0.3% y/y). The cost of appliances surged 2.0% (6.7% y/y), the third consecutive month of strength. Recreation goods prices jumped 1.1% (-0.4% y/y) following a 0.5% rise. Household furnishings costs rose 1.0% (2.6% y/y) after four straight months of roughly 0.6% improvement. Apparel prices increased 0.6% (-5.9% y/y) after strengthening in both July and June. Prices for education & communication goods rebounded 0.5% (-4.8% y/y) following three straight months of decline. Prices for medical care goods eased 0.1% (+0.3% y/y) after holding steady in July.

Services prices increased a lessened 0.2% (2.2% y/y) last month. The cost of public transportation declined 1.2% (-17.5% y/y) following a 3.4% strengthening in July. Education & communication prices edged 0.1% higher (2.9% y/y) as tuition costs fell 0.4% (1.9% y/y). Medical care service prices improved 0.1% (5.3% y/y) after two straight months of 0.5% increase. Shelter costs rose 0.1% (2.3% y/y) as the owners' equivalent rent of primary residences also increased 0.1%,, but by a greatly reduced 2.7% y/y. Recreation services prices improved 0.5% (2.2% y/y) after falling 1.2%.

Energy product prices were strong, rising 0.9% (-9.0% y/y) in August following two months of even stronger increase. Gasoline prices were up 2.0% (-16.9% y/y) after a 5.6% July rise and a 12.3% June increase. Fuel oil prices rose 3.9% (-23.6% y/y) after rising 4.3%. Natural gas prices eased 0.2% (-0.5% y/y) but the cost of electricity slipped 0.2% (-0.1% y/y).

Food prices inched 0.1% higher (4.1% y/y) last month. Food-at-home prices declined 0.1% (+4.6% y/y). The weakening was led by a 3.0% decline (+7.1% y/y) in egg prices. Meat, poultry & fish prices also were off 1.7% (+7.2% y/y). Cereal & cereal product prices declined 0.7% (+1.7% y/y) and bakery product prices improved 0.1% (NSA, +3.4% y/y). Fruit & vegetable prices rose 0.2% (2.3% y/y). Dairy & dairy product prices improved 1.5% (5.7% y/y). Nonalcoholic beverage prices 0.1% (5.1% y/y). Prices for food away from home rose 0.3% (NSA, 3.5% y/y).

The Consumer Price Index 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) Aug Jul Jun Aug Y/Y 2019 2018 2017
Total 0.4 0.6 0.6 1.3 1.8 2.4 2.1
Total less Food & Energy 0.4 0.6 0.2 1.7 2.2 2.1 1.8
  Goods less Food & Energy 1.0 0.7 0.2 0.4 0.2 -0.2 -0.7
  Services less Energy 0.2 0.6 0.3 2.2 2.8 2.9 2.7
 Food 0.1 -0.4 0.6 4.1 1.9 1.4 0.9
 Energy 0.9 2.5 5.1 -9.0 -2.1 7.5 7.9
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