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Economy in Brief

U.S. CPI Strengthens With Higher Energy Prices; Core Pricing Moderates
by Tom Moeller  December 13, 2017

The Consumer Price Index increased 0.4% (2.2% y/y) during November following a 0.1% October rise. The gain matched expectations in the Action Economics Forecast Survey. Prices excluding food & energy rose 0.1% (1.7% y/y). A 0.2% gain had been expected.

Lending support to pricing power last month was a 3.9% jump (9.4% y/y) in energy costs, powered by a 7.3% surge (16.5% y/y) in the price of gasoline. Fuel oil prices also were strong and posted a 5.2% jump (15.4% y/y). Natural gas costs increased 0.6% (3.6% y/y), following declines in four of the prior five months. Electricity prices improved a strengthened 0.5% (2.5% y/y) for a second straight month.

Pricing power in the goods sector eased 0.1% and the y/y increase remained depressed at -0.9%. Apparel prices declined 1.9% (-1.6% y/y), the third consecutive monthly fall. Household appliance costs were off 1.2% (-1.9% y/y), the fifth decline in six months. Recreation goods prices eased 0.5% (-3.1% y/y), the largest decline in seven months. Also weakening were household furniture & supply prices by 0.2% (-1.9% y/y), which have been falling for years. To the upside were prices for medical care goods which strengthened 0.6%, although the 1.8% y/y increase was well below the increases of the last two years. Prices for used motor vehicles jumped 1.0% (-2.1% y/y) following a 0.7% rise, while the 0.3% gain (-1.1% y/y) in new vehicle prices was only the second monthly increase this year.

Service sector prices increased 0.2% (2.5% y/y), half the rise three months ago. Shelter prices rose 0.2% (3.2% y/y) while the owner's equivalent rent of primary residence gained 0.2%. Here, the 3.1% y/y rise was below last year's peak of 3.6%. Tuition, school fees & childcare costs rose a steady 0.3% (2.4% y/y). Recreation services prices rose 0.2%, and the y/y gain strengthened to 3.5% from 1.5% in 2014. Offsetting these increases was a 1.8% decline (-0.8% y/y) in public transportation costs after a 0.6% rise. Medical care service prices slipped 0.1%, and the 1.6% y/y rise was below last year's 3.9% rise. It also approximated the weakest y/y gain since 1950.

Food prices held steady (1.4% y/y) for a second straight month. Egg pries declined 1.9% (+3.2% y/y) following a 6.7% jump. Nonalcoholic beverage prices were off 0.6% and were unchanged y/y. Fruit & vegetable prices fell 0.5% (+1.1% y/y), the third decline in four months. Meat, poultry & fish prices eased 0.2% (+1.4% y/y). Cereal & bakery product prices declined 0.2% (-0.8% y/y). Increasing were dairy product prices which rose 0.3% (0.0% y/y), reversing October's decline.

The consumer price data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.

Where Is Everybody? The Shrinking Labor Force Participation Rate from the Federal Reserve Bank of Philadelphia is available here.

Consumer Price Index, All Urban Consumers (% chg) Nov Oct Sep Nov Y/Y 2016 2015 2014
Total 0.4 0.1 0.5 2.2 1.3 0.1 1.6
Total less Food & Energy, 0.1 0.2 0.1 1.7 2.2 1.8 1.7
  Goods less Food & Energy -0.1 0.1 -0.2 -0.9 -0.5 -0.5 -0.3
  Services less Energy 0.2 0.3 0.2 2.5 3.1 2.6 2.5
 Food 0.0 0.0 0.1 1.4 0.3 1.9 2.4
 Energy 3.9 -1.0 6.1 9.4 -6.6 -16.7 -0.3
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