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Economy in Brief

U.S. CPI Increase Picks Up; Core Prices Remain Firm
by Tom Moeller  August 10, 2018

Consumer prices rose 0.2% (2.9% y/y) during July following a 0.1% June increase. The gain matched expectations in the Action Economics Forecast Survey. The CPI excluding food & energy also rose an expected 0.2% (2.4% y/y) for the third straight month.

Last month's CPI increase was led by a 0.3% rise (3.1% y/y) in services prices. Transportation prices rose 0.5% (4.0% y/y) led by a 1.7% strengthening (-1.5% y/y) in the cost of public transportation. Shelter costs increased 0.3% (3.5% y/y) as the owners' equivalent rent of residences also rose 0.3%; the 3.4% y/y rate of increase is up from 3.1% earlier this year. Rent of primary residences also rose 0.3%, but the 3.6% y/y gain is down from 3.9% in the middle of last year. Shelter accounts for a dominant 33% of the total CPI. Education & communication services prices rose 0.4%, and the 1.5% y/y increase compares to last year's decline in costs. Medical care services costs rose 0.1%. The 2.3% y/y gain is half what it was in the middle of 2016. Recreation services prices rose 0.1% (1.8% y/y).

Goods prices excluding food & energy notched 0.1% higher (-0.0% y/y) compared to declines in prices during each of the prior four months. Appliance prices jumped 1.5% (2.8% y/y). New vehicle prices gained 0.3% and the 0.2% y/y gain compares to a 1.6% y/y decline as of June. Recreation goods prices improved 0.2% (-2.7% y/y) following three straight months of decline. Furniture & bedding costs eased 0.1% and were unchanged y/y, but that compares to price deflation during the last several years. Apparel prices eased 0.3% (+0.3% y/y) following a 0.9% decline. Medical care product prices were off 1.1% (+0.4% y/y) and reversed the strength during the prior two months.

Food prices improved 0.1% (1.4% y/y) led by a 1.0% gain (0.9% y/y) in fruit & vegetable prices. That was accompanied by a 0.3% rise (-0.7% y/y) in meat prices which followed two months of decline. These gains were countered by a 0.6% decline (-0.4% y/y) in dairy & related product prices. Egg prices fell 0.2% (+16.7% y/y) following two months of larger decline. Cereal & bakery product prices also eased 0.2% (+0.5% y/y). The cost of eating out rose a strengthened 2.8% y/y.

Energy prices declined 0.5% (+12.1% y/y) as gasoline prices fell 0.6%, but they still were up by one-quarter y/y. Natural gas prices fell 0.5% (-1.3% y/y) and added to declines during the prior four months. Electricity prices fell 0.4% (-0.8% y/y) following a 1.4% decline. Working higher were fuel oil prices by 1.2%; they were up by one-third y/y.

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.

Consumer Price Index, All Urban Consumers (% chg) Jul Jun May Jul Y/Y 2017 2016 2015
Total 0.2 0.1 0.2 2.9 2.1 1.3 0.1
Total less Food & Energy 0.2 0.2 0.2 2.4 1.8 2.2 1.8
  Goods less Food & Energy 0.1 -0.0 -0.1 -0.0 -0.7 -0.5 -0.5
  Services less Energy 0.3 0.2 0.3 3.1 2.7 3.1 2.6
 Food 0.1 0.2 0.0 1.4 0.9 0.3 1.9
 Energy -0.5 -0.3 0.9 12.1 7.9 -6.6 -16.7
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