CPI: Another Downside Miss
August 11, 2017
Bottom Line: CPI missed estimates again in July at both the headline and core level as prices for cars and pone service continued to decline. Core CPI has risen just 1.2% annualized over the last 3 months and 0.9% over the last 6 months, sharply below 2016's pace of 2.2%. Owners' Equivalent Rent (a major component of CPI that is an estimate of the cost of shelter) rose by 0.3%, 3.2% year-over-year, 40bps below the pace of 2016. Overall inflationary pressures at the consumer level still remain modest but are rising now compared to year-ago levels.
The CPI ROSE by 0.1% in July, compared with market expectations for an increase of 0.2%.
- Food prices increased by 0.2% while energy prices fell by 0.1%.
- Prices for gasoline rose by 0.0% while prices for fuel oil declined by 1.2%, prices for electricity climbed by 0.4%, but prices for natural gas fell by 2.3%. Energy prices are now 3.4% 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 0.1%.
- Gains in medical care (+1.0%), apparel (+0.3%), were offset by declines in new vehicles (-0.5%), used cars & trucks (-0.5%).
- Prices for services excluding energy services rose 0.2% with moderate increase in medical care services (+0.3%), owner's equivalent rent (+0.3%), and transportation (+0.2%).
Article by Contingent Macro Advisors