U.S. Consumer Price Increase Is Weakest Since 2009

Consumer prices during all of 2013 increased 1.5%. The gain followed a 2.1% rise in 2012 and was half the 2011 increase. Price inflation ended 2013 on a firmer note, however, as December's 0.3% rise (1.5% y/y) was the strongest in six months. The increase matched consensus expectations in the Action Economics survey. Consumer price inflation excluding food and energy also decelerated last year to 1.8% following a 2.1% increase in 2012. December's 0.1% price gain (1.7% y/y) was, however, on a par with recent months' increases and matched consensus expectations.

A 0.7% fall in energy prices held back last year's CPI as it reversed the 2012 increase. Last year ended on a firmer note, however, with a 2.1% gain (0.4% y/y) in energy prices. Gasoline prices increased 3.1% in December (-1.0% y/y) and fuel oil prices rose 2.4% (-1.8% y/y). The 0.4% rise (3.2% y/y) in electricity prices was offset by a 0.4% decline (-0.1% y/y) in natural gas costs. Also to the weak side was food price inflation which decelerated during 2013 to 1.4% from 2.6% in 2012. Last month, food prices ticked up 0.1% (1.1% y/y) for the third straight month. Dairy product prices rose 0.4% in December (-0.5% y/y) and meat prices gained 0.4% (2.3% y/y). Working the other way, fruit & vegetable costs dropped 1.5% (-0.1% y/y) and cereal & bakery product prices slipped 0.1% (+0.5% y/y).

Consumer prices for goods less food and energy were unchanged during all of last year after increases near 1.3% during each of the prior four years. In December, prices were unchanged (-0.1% y/y) as appliance prices were off 0.3% (-3.8% y/y) and furniture costs declined another 0.4% (-2.3% y/y). Medical care product prices fell 0.8% (+0.3 y/y) and recreational goods prices declined 0.7% (-1.9% y/y). New vehicle prices were unchanged last month (0.4 y/y) but apparel prices gained 0.9% (0.7% y/y).

Core services prices increased 2.4% during all of last year as they did in 2012. In December, prices ticked up 0.1% (2.3% y/y). Medical care costs increased 0.3% (2.5% y/y) as did tuition costs (3.4% y/y). Shelter costs (32% of the CPI) gained 0.2% (2.5% y/y) as owners equivalent rent of primary residences also rose 0.2% (2.5% y/y). Public transportation costs fell 2.9% (-0.1 y/y) while recreation services prices slipped 0.1% (+1.7% y/y).

The consumer price data is available in Haver's USECON database while detailed figures can be found in CPIDATA. The expectations figure is from Action Economics and is found in the AS1REPNA database.