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08 16 2016 | by Victor Xing | Economics

July CPI: softer energy offset firmer medical care prices

July CPI

The July Consumer Price Index came in at -0.04% MoM vs. flat consensus, and core CPI rounded up to 0.1% at 0.09% MoM vs. 0.1% survey.  Despite a healthy rise in medical care inflation (which will play a larger role in Fed’s preferred inflation measure – Personal Consumption Expenditures), a small month-over-month decline in Owner Equivalent Rent (OER) and a drop in energy prices managed to weigh on the broader index.

July CPI, month-over-month changes:

  • Headline CPI at -0.04% MoM vs. flat consensus and 0.22% prior
  • Core CPI at 0.09% MoM vs. 0.1% consensus and 0.17% prior
  • OER at 0.29% MoM vs. 0.33% prior
  • Medical care at 0.52% MoM vs. 0.38% prior
  • Apparel at 0.02% MoM vs. -0.38% prior
  • New vehicles at 0.24% MoM vs. -0.18% prior
  • Energy at -2.05% MoM vs. 3.82% prior
July CPI
July CPI – month-over-month changes

July CPI, year-over-year changes:

  • Headline CPI at 0.88% YoY vs. 0.9% consensus and 1.05% prior
  • Core CPI at 2.16% YoY vs. 2.3% survey and 2.23% prior
  • OER at 3.26% YoY vs. 3.25% prior
  • Medical care at 3.99% YoY vs. 3.64% prior
  • Apparel at 0.25% YoY vs. 0.41% prior
  • New vehicles at -0.02% YoY vs. -0.41% prior
  • Energy at -10.88% YoY vs. -9.43% prior

Energy price volatility

The renewed weakness in energy prices was not unexpected – investors likely tried to price-in less fuel demand well before the summer driving season had came to an end, but the subsequent rebound in August carried similar momentum to confound market participants outside of the energy sector.  Policymakers will likely take a guarded view on aggregate inflation trends due to energy volatility, but the steady uptick in medical care inflation warrants attention.

July CPI
WTI crude futures declined in July

Next article08 10 2016 | by Victor Xing | Economics

June JOLTS: a small rebound in vacancy and hire rates