U.S. CPI Is Again Unchanged M/M But Accelerates Y/Y

There was a pickup in inflation last year, but the very latest figures show the pressure easing. The December Consumer Price Index was unchanged following a marginal November decline. The latest compared to expectations for a 0.1% uptick. Consumer prices less food & energy matched expectations and rose 0.1% following a 0.2% rise. During the last twelve months, the CPI rose 3.0%, double the gain during 2010. Faster growth in food & beverage prices accounted for some of the acceleration. The gain in energy subsided a bit. The bulk of the overall acceleration occurred in the total excluding energy, food and beverages. By this measure, prices rose nearly four times as fast last year as in 2010.

Food & beverage prices rose 0.2% in December after two months of 0.1% increase. The 12-month rise of 4.5% was up sharply from 1.5% during 2010 and was the strongest gain since 2008. Strength continued in dairy products (8.1% y/y), meats (7.9% y/y) and cereal products (6.1% y/y).Energy prices again led the CPI lower last month with a 1.3% decline. The 6.6% Dec/Dec increase compared to a 7.9% rise during 2010. Gasoline prices fell 2.0% m/m  (+9.9% y/y), down for the third straight month. Fuel oil prices also fell a not seasonally adjusted 0.7% (+14.3% y/y).

For goods alone, core prices fell 0.2%, down for the third month in the last four. However, the Dec/Dec gain of 2.2% compared to a 0.3% decline in 2010. Apparel prices slipped 0.1% last month. The 4.6% twelve-month rise compared to a 1.1% fall in 2010. Motor vehicle prices fell 0.4%, down for the fourth straight month. The 2.8% 12-month rise was up from 0.8% in 2010. Household furnishings & operations prices ticked up 0.1% though the 12-month increase of 1.0% was elevated from -2.5% the prior year.

Core service prices rose a strengthened 0.3% after five straight months of 0.2% increase. The 2.3% twelve-month rise was more-than double 2010. The acceleration was due to the 1.9% gain in shelter costs (32% of the CPI) compared to no-change in 2010. Owners equivalent rent of primary residences rose 1.8% last year versus 0.3% in 2010. Education costs were strong and rose 0.3% (4.6% y/y), up slightly from 2010 and medical care service prices increased 0.4%. Again, the 3.6% y/y increase was fairly stable. Public transportation prices were unchanged last month and the 3.8% 12-month increase was down from 4.7% in 2010. Recreation services costs rose 1.2% m/m but a stable 0.7% y/y.

The chained CPI, which adjusts for shifts in consumption patterns, fell 0.3% last month. However, the 2.8% y/y gain was double 2010. Chained prices less food & energy slipped 0.1% m/m. The 2.0% 2011 increase compared to 0.5% the prior year.

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