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Economy in Brief

U.S. CPI Remains Unchanged; Core Price Increase Slows
by Tom Moeller  August 16, 2016

Pricing power waned during July. The consumer price index remained unchanged (0.8% y/y), as expected in the Action Economics Forecast Survey, following two months of 0.2% increase. Prices excluding food & energy nudged 0.1% higher (2.2% y/y) after three months of 0.2% rise. A 0.2% increase had been expected.

A 1.6% decline (-10.9% y/y) in energy prices followed four consecutive months of strong increase. Gasoline prices fell 4.7% (-19.9% y/y) to the lowest level in three months. Fuel oil costs eased 1.3% (-17.8% y/y) after a 3.3% rise. Electricity prices posted a 0.5% increase (-1.0% y/y) while natural gas costs jumped 3.1% (-0.4% y/y).

Food prices posted little change (0.2% y/y) following declines in three of the prior four months. Meat prices declined 0.9% (-4.7% y/y) while egg prices fell 0.6% (-29.0% y/y). Dairy & related product prices were off 0.4% (-3.1% y/y) and cereal & bakery product prices eased 0.2% (-0.8% y/y). Offsetting these declines, fruit & vegetable prices increased 0.3% (1.4% y/y) and nonalcoholic beverage prices gained 0.3% (-0.5% y/y).

Core goods prices eased 0.1% (-0.6% y/y), down for the fifth consecutive month. Furniture & bedding prices declined 0.5% (-3.0% y/y) and recreational product prices fell 0.4% (-3.5% y/y). Appliance prices also were off 0.3% (-2.7% y/y), and education & communication product prices fell 0.3% (-3.9% y/y). To the upside were apparel prices by 0.9% (0.3% y/y) and new vehicle prices by 0.2% (-0.0% y/y). Medical care product prices rose 0.4% (3.6% y/y).

Core services prices improved 0.2% (3.1% y/y) after three months of 0.3% gain. Medical care service prices rose 0.5% (4.1% y/y). Owners' equivalent rent of primary residences increased 0.3% (3.3% y/y) and rents also improved 0.3% (3.8% y/y). Recreation services prices gained 0.1% (3.1% y/y), but tuition fees fell 0.1% (+2.7% y/y). Transportation services prices declined 0.2% (+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.

Monetary Policy in a Low R-star World is the title of yesterday's speech by John C. Williams, President & CEO of the Federal Reserve Bank of San Francisco and it is available here.

Consumer Price Index, All Urban Consumers (%) Jul Jun May Jul Y/Y 2015 2014 2013
Total 0.0 0.2 0.2 0.8 0.1 1.6 1.5
Total less Food & Energy 0.1 0.2 0.2 2.2 1.8 1.7 1.8
  Goods less Food & Energy -0.1 -0.2 -0.2 -0.6 -0.5 -0.3 -0.0
  Services less Energy 0.2 0.3 0.3 3.1 2.6 2.5 2.4
 Food -0.0 -0.1 -0.2 0.2 1.9 2.4 1.4
 Energy -1.6 1.3 1.2 -10.9 -16.7 -0.3 -0.7
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