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CPI: Inflation Pressures Easing

April 14, 2017
Bottom Line: Inflation pressures, even at the core level, are easing with base effects from energy prices coming off. Bottoming in February 2016, year-over-year comparisons were strongest in February of this year. Headline CPI has now risen at just 1.5% annualized over the last three months, slower than the 2.4% 12-month pace. Core CPI, 1.6% annualized over the last three months, is now running at a slower pace than it did over the last 12 months and in 2016 and 2015. Decelerating growth in "owner's equivalent rent" (an estimate of the cost of shelter) and an even more notable slowdown in the price of medical care services are helping ease overall inflation pressures again.

The CPI FELL by 0.3% in March, compared with market expectations for no change.
  • Food prices increased by 0.3% while energy prices fell by 3.2%.
  • Prices for gasoline fell by 6.2% while prices for fuel oil declined by 4.1%, prices for electricity slipped by 0.1%, and prices for natural gas fell by 0.8%. Energy prices are now 10.9% ABOVE their year ago level.
  • Overall consumer prices are now 2.4% ABOVE their year ago level; in March 2016, consumer prices were 0.9% ABOVE their year ago level.

The Core CPI FELL by 0.1%, 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 (+0.5%), medical care (+0.2%), were offset by declines in used cars & trucks (-0.9%), apparel (-0.7%).
  • Prices for services excluding energy services fell 0.1% with modest decrease in transportation (+0.4%), owner's equivalent rent (+0.2%), and shelter (+0.1%).
  • Core consumer prices are now 2.0% ABOVE their year ago level; in March 2016, consumer prices were 2.2% ABOVE their year ago level.