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CPI: Oil Impacts Headline as Core Moderates

December 15, 2016
Bottom Line: Consumer prices are now 1.7% above their year ago level as base effects from low energy prices (bottoming in early February) are steadily pushing the headline figure higher. Last November prices were just 0.5% above their year-ago levels. Meanwhile, core consumer prices rose modestly and are 2.1% above their year ago level. Core inflation pressures have been modest as the acceleration in medical care costs has slowed in the last three months. Annualized rates of core inflation over the last three-, six- and 12-months are 1.7%, 1.9% and 2.1%, respectively, indicating deceleration in core prices and modest overall inflation at the core level, despite acceleration at the headline level due to base effects.

The CPI ROSE by 0.2% in November, compared with market expectations for an increase of 0.2%.

Food prices declined by 0.0% while energy prices rose by 1.2%. Prices for gasoline rose by 2.7% while prices for fuel oil increased by 0.5%, prices for electricity climbed by 0.0%, but prices for natural gas fell by 0.4%. Energy prices are now 1.1% ABOVE their year ago level. Overall consumer prices are now 1.7% ABOVE their year ago level; in November 2015, consumer prices were 0.4% ABOVE their year ago level.

The Core CPI ROSE by 0.2%, compared with market expectations for an increase of 0.2%.

Prices for commodities excluding food and energy commodities fell by 0.3%. Gains in tobacco (+0.4%), used cars & trucks (+0.3%), were offset by declines in apparel (-0.5%), medical care (-0.5%). Prices for services excluding energy services rose 0.3% with moderate increase in transportation (+0.4%), owner's equivalent rent (+0.3%), and shelter (+0.3%). Core consumer prices are now 2.1% ABOVE their year ago level; in November 2015, consumer prices were 2.0% ABOVE their year ago level.