U.S. CPI Declines in December and Weakens Y/Y
by:Tom Moeller
|in:Economy in Brief
Summary
• Core price inflation slows y/y. • Goods price weakness offsets service price strength. • Energy price decline accompanies food price strengthening.
The Consumer Price Index eased an expected 0.1% during December after increasing 0.1% in November. It was the first decline in six months and lowered the y/y increase to 6.5% from a June high of 9.1%. The Consumer Price Index excluding food & energy rose an expected 0.3% last month following a 0.2% November rise. It was the third straight month of moderate increase that lowered the y/y rise to 5.7%, compared to a 6.6% September high. The expectations figures are from the Action Economics Forecast Survey.
A 4.5% decline in energy prices (+7.3% y/y) dampened the CPI last month and was the fifth decline in six months. Gasoline prices fell 9.4% (-1.5% y/y). Fuel oil costs were off 16.6% but rose 41.5% y/y. Natural gas prices rose 3.0% (19.3% y/y) and electricity prices increased 1.0% (14.3% y/y).
Food prices rose 0.3% in December (10.4% y/y) as egg prices surged 11.1% (59.9% y/y). Meat prices, poultry & egg prices edged 0.1% higher (4.5% y/y) while cereal & bakery product prices were little-changed (+16.1% y/y). Elsewhere, prices declined. Fruit & vegetable prices fell 0.6% (+8.4% y/y) and dairy prices declined 0.3% (+15.3% y/y).
Goods prices excluding food & energy declined 0.3% in December (+2.1% y/y). Used car & truck prices fell 2.5% (-8.8% y/y) and information technology prices weakened 0.9% (-11.8% y/y). Offsetting these declines, home furnishing prices rose 0.2% (+7.3% y/y) while appliance prices rose 0.2% (1.1% y/y). Apparel prices increased 0.5% (2.9% y/y) and recreation product prices edged 0.1% higher (4.1% y/y).
Offsetting the weakness in goods prices last month, service costs increased 0.5% (7.0% y/y). Shelter prices rose 0.8% (7.5% y/y) as owners’ equivalent rent of primary residences increased 0.8% (7.5% /y). Rents also rose 0.8% (7.6% y/y). Education & communication prices increased 0.3% (2.4% y/y) while transportation service prices rose 0.2% (14.6% y/y). Recreation service prices improved 0.3% (5.7% y/y) and medical care service costs rose 0.1% (4.1% y/y).
The Consumer Price figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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