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Economy in Brief

U.S. CPI Strengthens; Core Pricing Picks Up
by Tom Moeller  September 14, 2017

The Consumer Price index increased 0.4% (1.9% y/y) during August following a 0.1% July uptick. It was the strongest increase since January and compared to expectations for a 0.3% rise in the Action Economics Forecast Survey. The CPI excluding food & energy gained an expected 0.2% (1.7% y/y) following four consecutive months of 0.1% rise.

A 2.8% lift (6.4% y/y) in energy prices provided strength to the overall price index. That followed declines during five of the prior six months. Gasoline prices jumped 6.3% (10.4% y/y) while fuel oil costs rose 2.9% (NSA, 9.4% y/y). Electricity prices held steady (2.3% y/y) while natural gas prices fell 0.5% (+5.4% y/y), down for the third straight month.

Further strength to pricing power occurred last month as services prices surged 0.4% (2.5% y/y) following three months of 0.2% gain. The rise was powered by a 0.5% increase (3.3% y/y) in shelter costs which itself reflected a 4.4% jump (1.4% y/y) in the cost of lodging away from home. Rents of primary residences increased a strengthened 0.4% (3.9% y/y) and the owners' equivalent rent of primary residences gained 0.3% (3.3% y/y) for the third straight month. Further strength in services prices could be found in recreation where a 0.5% increase (3.8% y/y) followed a 0.6% gain. Transportation services prices increased 0.4% (3.5% y/y), double the prior two months' gain, but medical care prices rose just 0.2% (1.6% y/y) after two months of 0.3% gain.

Food prices ticked 0.1% higher (1.1% y/y) after a 0.2% rise. Cereal & bakery product costs rose a strengthened 0.3% (-0.2% y/y), but meat, poultry & fish prices eased 0.2% (+0.8% y/y). Egg prices ticked 0.1% higher (-3.7% y/y). Fruit & vegetable prices eased 0.2% (+1.0% y/y) while dairy product prices fell 0.4% (+0.5% y/y).

Prices for goods excluding food & energy slipped 0.1% (-0.9% y/y) for a third straight month. Recreation goods prices fell 0.4% (-3.4% y/y) for a second month while medical care product prices eased 0.1% (+2.4% y/y). Transportation product prices dipped 0.1% (-1.7% y/y) but apparel prices edged 0.1% higher (-0.6% y/y) after a 0.3% rise. Home furnishing prices held steady (-1.6% y/y), but appliance prices strengthened 1.1% (-1.8% y/y) after two months of decline.

The Consumer Price Data can be found in Haver's USECON data base with additional detail in the Action Economics figure is in the AS1REPNA database.

Does Low Unemployment Signal a Meaningful Rise in Inflation? from the Federal Reserve Bank of St. Louis is available here.

Consumer Price Index, All Urban Consumers (%) Aug Jul Jun Aug Y/Y 2016 2015 2014
Total 0.4 0.1 0.0 1.9 1.3 0.1 1.6
Total less Food & Energy 0.2 0.1 0.1 1.7 2.2 1.8 1.7
  Goods less Food & Energy -0.1 -0.1 -0.1 -0.9 -0.5 -0.5 -0.3
  Services less Energy 0.4 0.2 0.2 2.5 3.1 2.6 2.5
 Food 0.1 0.2 0.0 1.1 0.3 1.9 2.4
 Energy 2.8 -0.1 -1.6 6.4 -6.6 -16.7 -0.3
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