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Economy in Brief

U.S. CPI Moderates Despite Higher Energy Prices
by Tom Moeller  June 16, 2016

The recent increase in energy prices has been offset by a tame pricing environment elsewhere. Last month, that left the increase in the Consumer Price Index moderating to 0.2% (1.0% y/y) following an unrevised 0.4% April rise. The gain fell short of expectations in the Action Economics Forecast Survey for a 0.3% rise. Energy price inflation moderated with a 1.2% increase (-10.1% y/y) following a 3.4% rise. Food price inflation also eased as prices fell 0.2% (+0.7% y/y). The CPI excluding both food & energy matched expectations and increased a steady 0.2% (2.2% y/y).

The increase in energy prices moderated as gasoline prices rose 2.3% (-16.9% y/y) following April's 8.1% gain. Since the February low, gasoline prices have risen 12.9%. Continuing to firm, however, were fuel oil costs which rose a strengthened 6.2% (NSA, -23.6% y/y). Also stronger were natural gas prices, up 1.7% (-4.7% y/y), the strongest monthly gain since December 2014. Electricity prices fell 0.2% (-1.3% y/y), down for five of the last six months.

Food prices fell 0.2% (+0.7% y/y), down for two of the last three months. Price declines spread throughout most categories. Fruit & vegetable prices were off 0.7% (+1.0% y/y) while dairy & related product costs eased 0.6% (-2.2% y/y). Meat, poultry & fish prices declined 0.5% (-3.2% y/y) and cereal & bakery product costs eased 0.4% (-0.2% y/y).

Also to the downside were goods prices excluding food & energy which posted a 0.2% decline (-0.5% y/y), off for the third straight month. The decline was led by used car & truck prices which fell 1.3% (-2.3% y/y). New vehicle costs also eased 0.1% (-0.2% y/y). Recreation product prices declined 0.3% (-2.6% y/y). Medical care product prices slipped 0.2% (+2.2% y/y). These declines were offset by a 0.8% rebound (0.5% y/y) in apparel prices. Appliance prices also rose 0.6% (-3.0% y/y).

Services prices less energy rose 0.3% (3.2% y/y) for the fourth month this year. Medical care services costs led the increase with a 0.5% rise (3.5% y/y). Shelter costs followed with a 0.4% rise (3.4% y/y) as the owners' equivalent rent of primary residences gained 0.3% (3.3% y/y). Transportation services prices overall rose 0.3% (3.2% y/y), but public transportation costs declined 0.8% (-1.0% y/y). Recreation services prices rose 0.2% (3.1% y/y), the weakest rise in six months. Tuition and other school fees rose 0.3% (3.0% 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, All Urban Consumers (%) May Apr Mar May Y/Y 2015 2014 2013
Total 0.2 0.4 0.1 1.0 0.1 1.6 1.5
Total less Food & Energy 0.2 0.2 0.1 2.2 1.8 1.7 1.8
  Goods less Food & Energy -0.2 -0.1 -0.2 -0.5 -0.5 -0.3 -0.0
  Services less Energy 0.3 0.3 0.2 3.2 2.6 2.5 2.4
 Food -0.2 0.2 -0.2 0.7 1.9 2.4 1.4
 Energy 1.2 3.4 0.9 -10.1 -16.7 -0.3 -0.7
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