U.S. Consumer Price Inflation Is Minimal

The consumer price index gained 0.1% during September (1.7% y/y) following an unrevised 0.2% August decline. The rise matched expectations in the Action Economics Forecast Survey. Consumer prices excluding food and energy also ticked 0.1% higher (1.7% y/y) following no change. Expectations had been for a 0.2% increase.

Weakness in pricing power was paced by a 0.7% decline (-0.6% y/y) in energy prices. Fuel oil prices led the way lower with a 2.1% drop (-3.2% y/y), down for the seventh straight month. Gasoline prices fell 1.0% (-3.6% y/y) on the heels of a 4.1% decline. Electricity prices were off 0.7% (+2.8% y/y) but natural gas prices rebounded 1.6% (5.8% y/y) following four straight months of decline.

Continued strength in food prices offset some of this weakness with a 0.3% increase (3.0% y/y). Meat prices remained strong, posting a 1.2% rise (13.0% y/y). Dairy product prices gained 0.5% (4.9% y/y) but egg prices declined 2.8% (+8.5% y/y). Offsetting this strength was a 0.4% decline (-0.1% y/y) in cereal & bakery product prices. Fruit & vegetable costs ticked 0.1% higher (0.9% y/y) and nonalcoholic beverage costs gained 0.2% (0.2% y/y).    

Continuing weak were prices for goods less food and energy, unchanged for the month and down 0.2% y/y. Furniture & bedding prices were off another 0.7% (-3.5% y/y) but appliance costs gained 0.5% (-4.5% y/y). New vehicle prices were unchanged  (0.3% y/y) but used vehicle prices slipped 0.1% (-0.4% y/y). Recreation product prices improved 0.2% (-2.2% y/y) and apparel prices were unchanged (0.5% y/y). Continuing to show strength were educational books & supplies prices which rose 0.3% (4.6% y/y).    

Core service prices improved 0.2% (2.4% y/y). Shelter costs (32% of the CPI) rose 0.3% (3.0% y/y) as owners equivalent rent of primary residences increased 0.2% (2.7% y/y). Tuition & other educational costs edged 0.1% higher (3.2% y/y) while medical care services prices also gained 0.1% (1.7% y/y). Public transportation prices slipped 0.1% (-2.2% y/y) while recreation services prices were roughly stable (+1.3% 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.

Consumer Price Index (%)	Sep	Aug	Jul	Sep Y/Y	2013	2012	2011
Total	0.1	-0.2	0.1	1.7	1.5	2.1	3.2
Total less Food & Energy	0.1	0.0	0.1	1.7	1.8	2.1	1.7
Goods less Food & Energy	0.0	-0.1	-0.0	-0.2	-0.0	1.3	1.3
Services less Energy	0.2	0.0	0.1	2.4	2.4	2.4	1.8
Food	0.3	0.2	0.4	3.0	1.4	2.6	3.7
Energy	-0.7	-2.6	-0.3	-0.6	-0.7	0.9	15.2

 

 

U.S. Mortgage Loan Applications Improve With Lower Interest Rates
by Tom Moeller  October 8, 2014

The Mortgage Bankers Association reported that their total Mortgage Market Volume Index increased 3.8% last week (-23.1% y/y) following two week's of decline. Applications remained near the lowest level of the economic recovery. Applications to refinance an existing loan jumped 5.0% (-31.9% y/y) following two weeks of decline. Home purchase applications gained 2.4% (-8.1% y/y) after two of being roughly unchanged.

Mortgage financing costs remained under control. The effective interest rate on a 15-year mortgage edged lower to 3.56%. The effective rate on a 30-year fixed rate loan fell to 4.35%. The rate on a Jumbo 30-year loan slipped to 4.29%. For adjustable 5-year mortgages, the effective interest rate fell sharply to 3.33% and remained down versus last year's 3.74% peak.

The average mortgage loan size jumped w/w to $246,300 but remained below the $253,800 May peak. For home purchases, the average loan size rose to $275,000, down versus the $280,500 high. For refinancings, it increased w/w to $224,000, off from the $232,200 high.

Applications for fixed interest rate loans declined 24.2% y/y while adjustable rate loan applications were off 6.2% y/y.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYW database.

MBA Mortgage Applications (SA, 3/16/90=100)	10/17/14	10/10/14	10/03/14	Y/Y%	2013	2012	2011
Total Market Index		370.4	350.7	-23.1	616.6	813.8	572.3
Purchase		171.7	172.9	-8.1	197.5	187.8	182.6
Refinancing		1,502.4	1,358.0	-31.9	3,070.0	4,505.0	2,858.4
15-Year Mortgage Effective Interest Rate (%)		3.48	3.56	3.57 (10/13)	3.42	3.25	3.97