CPI: Steady Deceleration in OER as Prices Fall For Autos, Med and Cell Service
June 14, 2017
Bottom Line: Inflation pressures continued to ease with headline CPI down in May and down over the last three months. Core CPI rose slightly in May and is only up 1.5% annualized over the last three months. Core consumer prices are just 1.7% above their year ago level. Decelerating gains in "owner's equivalent rent" (an estimate of the cost of shelter), declining prices in medical-care services, lower new and used vehicle prices, as well as a further decline in cell phone services continued to help ease overall inflation pressures. Overall, most of these important components, especially OER, are seeing decelerating trends with 3-month averages slower than 6-month averages, which are slower than 12-month averages and 2016's pace.
The CPI FELL by 0.1% in May, compared with market expectations for no change.
- Food prices increased by 0.2% while energy prices fell by 2.7%.
- Prices for gasoline fell by 6.4% while prices for fuel oil declined by 2.5%, prices for electricity climbed by 0.3%, and prices for natural gas rose by 1.9%.
- Energy prices are now 5.4% ABOVE their year ago level.
- Overall consumer prices are now 1.9% ABOVE their year ago level; in May 2016, consumer prices were 1.0% ABOVE their year ago level.
The Core CPI ROSE 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 medical care (+0.4%), tobacco (+0.1%), were offset by declines in apparel (-0.8%), alcoholic beverages (-0.3%).
- Prices for services excluding energy services rose 0.2% with modest increase in transportation (+0.3%), shelter (+0.2%), and owner's equivalent rent (+0.2%).
- Core consumer prices are now 1.7% ABOVE their year ago level; in May 2016, consumer prices were 2.2% ABOVE their year ago level.
Article by Contingent Macro Advisors