U.S. CPI Remains Unchanged; Core Prices Increase Steadily

The Consumer Price Index was unchanged (0.5% y/y) during November following a 0.2% October rise. Prices excluding food & energy increased 0.2% (2.0% y/y) for the third consecutive month. Both the total and core price figures matched expectations in the Action Economics Forecast Survey.

A 0.3% increase (2.9% y/y) in core services prices repeated the prior two months' gain. The increase in medical care prices eased to 0.4% (3.1% y/y). The rise was half the prior month's but the y/y increase of 3.1% was its swiftest since September 2013. Shelter prices rose 0.2% (3.2% y/y) after two months of 0.3% increase as owners equivalent rent of primary residences increased a steady 0.2%. The 3.1% y/y increase compared to little change in 2010. Rents of primary residences gained just 0.2%, but here again the y/y rise was a strong 3.6%. Public transportation services prices increased 0.5% (-1.8% y/y) and recreation services costs remained unchanged; the 2.4% y/y rise was double that of a year ago.

Energy prices declined 1.3% (-14.7% y/y) led by a 2.4% drop (-24.1% y/y) in gasoline prices. Natural gas costs were off 1.9% (-11.7% y/y) and fuel oil prices fell 1.3% (NSA), down roughly one-third y/y. Electricity costs increased 0.3% (-0.2% y/y).

Goods prices excluding food & energy eased 0.2% (-0.6% y/y), off for the sixth month in the last seven. Appliance prices fell 1.3% (-4.2% y/y), also down for the sixth month in the last seven. Home furnishings costs were off 0.5% NSA (-1.4% y/y). Recreation goods prices declined 0.6% (-2.6% y/y) and apparel costs fell 0.3% (-1.5% y/y). Offsetting these declines, new vehicle prices ticked up 0.1% (0.2% y/y) and medical care commodity prices gained 0.3% (2.5% y/y), the strongest change in three months.  Education books and supplies prices jumped 0.6% (4.6% y/y). 

Food prices eased 0.1% (1.3% y/y), falling for the first time since April. Egg prices declined 3.8% (+23.7% y/y), down for the third straight month. Meat prices were off 0.6% (-2.1% y/y) and cereal prices fell 1.2% (+0.1% y/y), reversing the prior month's increase. Nonalcoholic beverage prices declined 0.5% and were unchanged y/y. To the upside for the fifth straight month were fruit & vegetable prices, up 0.6% (1.4% 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.

Why Ask? The Role of Asking Prices in Transactions from the Federal Reserve Bank of Philadelphia is available here

The Empire State Factory Index of General Business Conditions remained negative for the fourth consecutive month during November. The reading of -10.74 compared to an unrevised -11.36 in October. These diffusion indexes were nearly the lowest since April 2009. The latest figure disappointed expectations for -6.0 in the Action Economics Forecast Survey. The data are reported by the Federal Reserve of New York and reflect business conditions in New York, northern New Jersey and southern Connecticut.

Based on these figures, Haver Analytics calculates a seasonally adjusted index that is compatible to the ISM series. The adjusted figure improved slightly to 47.0, but also was near the six-year low. A rising level of activity is indicated by a figure above 50. Since inception in 2001, the business conditions index has had a 62% correlation with the change in real GDP.

The component series showed mixed results this month. The employment figure remained in negative territory for the third month, near its lowest point since December 2012. During the last ten years, there has been a 72% correlation between the employment series and the m/m change in factory sector payrolls. New orders neared the lowest level since 2009. Shipments improved but still were at a three-month low. Vendor delivery speeds remained at the fastest pace since December 2014 and unfilled orders declined.

The prices paid index improved slightly to the highest point in three months. A sharply reduced 11% of respondents reported higher prices but a sharply reduced 6% reported them lower. Prices received remained in negative territory.

Expectations for business conditions fell sharply to the lowest level since November 2012. New orders and shipments deteriorated sharply but unfilled orders and inventories surged. Employment also gained to the highest level in six months but prices paid remained weak.

The Empire State figures are diffusion indexes which are calculated by subtracting the percent of respondents reporting poorer business conditions from those reporting improvement. Thus, they have a good correlation with growth in the series covered. The data is available in Haver's SURVEYS database. The ISM-adjusted headline index is calculated by Haver Analytics. The series dates back to 2001. The Action Economics figure can be found in Haver's AS1REPNA database.

WTI crude oil costs declined to $40.40 (-39.9% y/y) last week, and yesterday dropped to a seven-year low of $37.65 per barrel. Brent crude oil prices fell w/w to $42.41 per barrel last week and were $40.65 yesterday. WTI prices reached $107.23 in June 2014.

Gasoline prices at the pump declined last week to $2.05 per gallon, down one penny from the prior week. Prices were down 23.4% y/y and roughly equaled the January low of $2.04. Haver Analytics constructs factors adjusting for the seasonal variation in pump prices. The seasonally adjusted price declined to $2.20 per gallon. Moving sharply lower was the spot market gasoline price. It fell to $1.34 per gallon (-29.8% y/y).

Natural gas prices improved last week to $2.12 per mmbtu (-41.8% y/y) and were $2.03 yesterday.

Price declines occurred as the supply of petroleum products continued to outpace demand. Gasoline inventories increased 4.0% y/y and inventories of all petroleum products rose 10.4% y/y. Crude oil production (input to refineries) increased 1.5% y/y during the last four weeks. Gasoline demand eased 0.6% y/y last week and demand for all petroleum products declined 1.6% y/y.

The energy price data are reported by the U.S. Department of Energy. The petroleum demand and inventory figures are from the Oil & Gas Journal Weekly. These data can be found in Haver's WEEKLY database. The daily figures are in DAILY and greater detail on prices, demand and production, along with regional breakdowns, are in OILWKLY.