Global| Aug 14 2008U.S. CPI Up 0.8% in July, Y/Y by 5.6%. Boost from Gasoline Prices Now Easing
by:Tom Moeller
|in:Economy in Brief
Summary
The consumer price index (CPI-U) for July rose 0.8%. That was down somewhat from the June increase of 1.1%, according to the Bureau of Labor Statistics, but the gain was double the Consensus expectation for a 0.4% rise. The Y/Y [...]
The consumer price index (CPI-U) for July rose 0.8%. That was down somewhat from the June increase of 1.1%, according to the Bureau of Labor Statistics, but the gain was double the Consensus expectation for a 0.4% rise. The Y/Y increase of 5.6% was the fastest since late 1990.
For June and July together, prices rose at an 11.8% annual rate. Except for a short-lived spike in mid-2005 that was the fastest rate of increase since 1982.
Energy prices jumped another 4.0% in July after increases of 6.6% and 4.4% during the prior two months. Fuel oil prices continued strong and posted a 1.3% (61.1% y/y) increase while natural gas & electricity prices jumped 4.0% (15.0% y/y).
Gasoline prices jumped a seasonally adjusted 4.1% in July and they were up 37.9% y/y. Not seasonally adjusted gasoline prices, however, rose just 0.7% m/m last month and they are down 5.2% m/m on average so far in August.
Food & beverage prices continued strong. A 0.9% July increase lifted the y/y gain to 5.8% and that was the fastest since 1990. Prices for cereals & bakery products rose at a 17.0% rate during the last three months while dairy and related products increased at a 13.2% rate. Prices for meats poultry & fish showed increased upward pressure and they rose at an 8.1% rate while dairy product prices surged at an 13.2% rate during the last three months.
Less food & energy consumer prices beat expectations, slightly, with a 0.3% increase which matched the June rise. During the last three months the increase in core prices accelerated to a 3.5% annual rate which was the quickest since mid-2006.
Core goods prices jumped 0.5%, the fastest m/m increase since 1999. On a three-month basis prices rose at an accelerated 1.7% rate, the fastest since late 2004. Higher apparel prices led the recent strength with a 1.2% (0.7% y/y) increase. Prices for household furnishings & operations also were firm and they rose 0.4% (0.8% y/y). Prices for new & used motor vehicles nudged up 0.2% but they were down 0.3% year-to-year. In July, tobacco prices jumped 1.2% (7.7% y/y).
Core services prices again were firm and they rose 0.3%. That lifted the three-month growth rate to 4.1%, the fastest in two years. Public transportation prices remained strong. They posted a 1.1% July increase (14.5% y/y), rising at a 31.2% annual rate during the last three months. Medical care services prices rose a reduced 0.2% (4.1% y/y) and shelter prices also rose just 0.2% (2.5% y/y) in July. That was the weakest y/y gain since early 2006. Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, nudged up 0.1% (2.6% y/y) and rents rose 0.3% (3.7% y/y). Education costs rose another 0.5% (5.7% y/y) after a 2.4% rise during all of 2007.
The chained CPI, which adjusts for shifts in consumption patterns, rose 0.4%. Less food and beverages chained prices rose 0.2%.
| Consumer Price Index (%) | July | June | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Total | 0.8 | 1.1 | 5.6 | 2.9 | 3.2 | 3.4 |
| Total less Food & Energy | 0.3 | 0.3 | 2.5 | 2.3 | 2.5 | 2.2 |
| Goods less Food & Energy | 0.5 | 0.1 | 0.6 | -0.4 | 0.2 | 0.5 |
| Services less Energy | 0.3 | 0.4 | 3.3 | 3.4 | 3.4 | 2.8 |
| Energy | 4.0 | 6.6 | 29.3 | 5.6 | 11.0 | 17.0 |
| Food & Beverages | 0.9 | 0.7 | 5.8 | 4.0 | 2.3 | 2.5 |
| Chained CPI: Total (NSA) | 0.4 | 0.8 | 4.8 | 2.5 | 2.9 | 2.9 |
| Total less Food & Energy | 0.2 | 0.1 | 2.2 | 2.0 | 2.2 | 1.9 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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