CPI: Core A Touch Stronger Than Expected
January 12, 2018
Bottom Line: Headline consumer inflation rose in December, mostly in-line with estimates, as core CPI rose a touch more than expected. Core CPI over the last three months of 2017 rose at 2.5% annualized, accelerating from the 1.8% annualized pace for all of 2017. Cell phone plans and apparel prices caused a marked decline in the core metric in Spring of '17. As base effects of year-on-year changes come through, these factors should now cause a modest upward acceleration in core prices over the coming months. The largest core component, shelter, also saw a modest acceleration in price in late '17, furthering the rebound in core CPI.
The CPI ROSE by 0.1% in December, compared with market expectations for an increase of 0.1%.
Food prices increased by 0.16% while energy prices fell by 1.2%.
Prices for gasoline fell by 2.7% while prices for fuel oil increased by 0.3%, prices for electricity climbed by 0.1%, and prices for natural gas rose by 1.2%.
Energy prices are now 6.9% ABOVE their year ago level.
Overall consumer prices are now 2.1% ABOVE their year ago level; in December 2016, consumer prices were 2.1% 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 0.2%.
- Gains in used cars & trucks (+1.4%),
- medical care (+1.0%),
- tobacco (-0.6%),
- apparel (-0.5%).
- shelter (+0.4%),
- transportation (+0.3%), and
- owner's equivalent rent (+0.3%).
Article by Contingent Macro Advisors