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CPI: Core Holds Near Post-Crisis Highs

February 15, 2017
Bottom Line: Consumer prices are now 2.5% higher over the last 12 months as base effects from energy bottoming almost exactly a year ago impact headline figures. That said, core components are now rising at their fastest pace in the post-crisis period. Commodity-related components of core saw higher prices in January, especially apparel and new cars. Owners' equivalent rent, the largest component of core, continues to rise at about 3.5% per annum, while medical care costs are moderating a bit, rising at a 3% annual rate over the last 3 months after growing at a 3.9% pace for all of 2016. Overall inflationary pressures at the consumer level still remain modest but are rising now. And base effects suggest they will for at least another month.

The CPI ROSE by 0.6% in January, compared with market expectations for an increase of 0.3%.
  • Food prices increased by 0.1% while energy prices rose by 4.0%.
  • Prices for gasoline rose by 7.8% while prices for fuel oil increased by 3.1%, prices for electricity slipped slightly, but prices for natural gas rose by 1.5%.
  • Energy prices are now 11.1% ABOVE their year ago level.
  • Overall consumer prices are now 2.5% ABOVE their year ago level; in January 2016, consumer prices were 1.4% ABOVE their year ago level.

The Core CPI ROSE by 0.3%, compared with market expectations for an increase of 0.2%.
  • Prices for commodities excluding food and energy commodities rose by 0.4%.
  • Gains in apparel (+1.4%), new vehicles (+0.9%), were offset by declines in used cars & trucks (-0.4%)
  • Prices for services excluding energy services rose 0.3% with moderate increase in transportation (+0.6%), owner's equivalent rent (+0.2%), and shelter (+0.2%).
  • Core consumer prices are now 2.3% ABOVE their year ago level; in January 2016, consumer prices were 2.2% ABOVE their year ago level.