CPI Firms With Energy Prices But Core Prices Decline

Consumer price inflation remains under wraps. That's the message from this morning's report by the U.S. Bureau of Labor Statistics that the January CPI rose 0.2% for the fifth consecutive month. The increase was slightly lower than Consensus expectations for a 0.3% gain though it was part of the CPI's accelerated y/y increase of 2.7% versus the -2.0% reading as of last July. On Wednesday the seasonally adjusted CPI figures were revised back to 2005. 

The acceleration noted above is the result of higher energy prices which rose 2.8% last month and by 19.8% during the last twelve. For January the rise reflected a 4.4% spurt in gasoline prices which have risen by one-half during the last twelve months. Fuel oil prices also jumped 6.9% (13.6% y/y) but natural gas & electricity prices were roughly unchanged from December and down 4.6% y/y. 

Food & beverage prices continued weak. They posted a moderate 0.2% January increase but a 0.2% decline versus last year. Dairy prices jumped 2.1% in January yet remained down 5.1% y/y. Fruit & vegetable costs showed the same pattern. They rose 1.3% last month but were off 1.2% y/y. In the same vein, prices for meats, poultry, fish & eggs rose 0.4% but were down 3.2% y/y. The restraint on the monthly food price increase came from a 0.5% decline in cereal & bakery product prices (-1.5% y/y) and a modest 0.1% uptick (1.6% y/y) in the cost of eating out. Alcoholic beverage prices also rose just 0.1% (1.5% y/y) following strength during the last fifteen years. 

Core consumer prices remained weak. They posted a 0.1% decline, the first negative reading since 1982, as earlier strength in core goods prices tapered off. Their 0.1% January uptick was part of a reduced 1.7% (AR) increase during the last three months. That compares to a 5.4% three-month gain as of last April. The monthly increase in tobacco prices tapered off to 0.4% (29.5% y/y) and new & used motor vehicles prices rose just 0.2% (5.4% y/y). Also easing were apparel prices which fell 0.1% (+1.7% y/y). It was the third decline in the last four months. Continuing weak were prices for household furnishings & operation, off 0.1% (-1.2% y/y) for the ninth straight month of decline. 

Core services prices continued weak with a 0.2% decline (+0.9% y/y), the first drop since 1982. Weakness in the housing market caused a 0.5% decline in shelter prices which are off 0.3% y/y. Owners equivalent rent of primary residences, a measure not equivalent to other house price measures, slipped further from a June peak and rose just 0.4% during the last twelve months. Elsewhere in services, public transportation prices fell 1.8% (+2.8% y/y) while medical care services prices continued steadily upward by 0.5% (3.5% y/y). Finally, education costs remained strong with a 0.3% increase (4.6% y/y) but recreation prices slipped for the fifth straight month (0.4% y/y). 

The chained CPI, which adjusts for shifts in consumption patterns rose 0.4% last month and rose 3.6% year-to-year. Conversely, chained prices less food & energy slipped marginally (+1.5% y/y). 

The consumer price data is available in Haver's USECON database while detailed figures can be found in the CPIDATA database.

Modifications to the terms of the discount window lending programs by the Federal Reserve Board can be found here.