August CPI Down 0.2% on Cheaper Gasoline

Consumer prices fell for the first time in 16 months in August as lower gasoline prices pulled the energy index and overall prices lower; moreover, core prices were flat, the first time since October 2010 that the core price index did not increase..  The Consumer Price Index for All Urban Consumers (CPI-U) for August from the Bureau of Labor Statistics showed that seasonally adjusted prices fell by 0.2% after rising only 0.1% in July..  The unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, slipped to 237.852 in August from 238.250 in July, while it still remained 1.7% higher than the 233.877 reading from August of last year.  With modest food price increases insufficient to offset decreases in energy prices, core prices, which exclude those volatile components, were statistically unchanged, as the unadjusted core index rose from 238.138 in July to 238.296 in August, while that index was also 1.7% ahead of its year ago level of 234.258...

The seasonally adjusted energy price index was 2.6% lower in August as prices for energy commodities fell 3.9% while the index for energy services fell 0.6%.  The decrease in energy commodity prices was primarily due to a 4.1% drop in the price of gasoline, the largest component, while fuel oil prices fell 0.6% and prices for other fuels, including propane, kerosene and firewood, averaged a 1.2% decrease. Within energy services, the index for utility gas service fell for the 3rd consecutive month, as it was down another 0.4% after falling 2.6% in June and 1.7% in May, while the electricity price index rose 0.1% in August after falling 0.3% in July...

The seasonally adjusted food index rose by 0.2% in August, after rising 0.4% in July, and it is now 2.7% higher than August a year ago.  Prices for food away from home rose by 0.2% as prices for meals at full service restaurants and at fast food restaurants were both 0.3% higher, while prices for food at schools fell 2.3%, and prices for other food away from home fell 0.2%..  Meanwhile, the price index for food at home also rose 0.2% as higher prices for meats and dairy products were partially offset by lower prices for fruits, vegetables and beverages.. Cereal and bakery products averaged 0.2% higher than in July, as a 0.6% increase in prices flour and prepared mixes, a 1.1% increase in the price of bread, and a 1.8% increase in cookie prices was only partially offset by a 0.7% decrease in prices for breakfast cereals and a 2.3% decrease in the price of rice.. Prices in the meats, poultry, fish, and eggs group rose 1.5% as beef and veal prices were 4.2% higher, pork prices rose 1.6%, poultry prices increased by 0.4%, fish and other seafood prices averaged 0.5 higher, while egg prices fell 2.0%. Over the past year, most of the items in the beef and pork groups have seen price increases greater than 10%, topped by 19% higher prices for beef roasts and 13.7% higher prices for pork chops, while the prices in the entire meats, poultry, fish, and eggs group now average 8.8% higher than a year ago.  In addition, dairy products prices were 0.6% higher in August than in July as ice cream was priced 1.8% higher, cheese prices rose 0.8% and milk prices increased by 0.4%.. Meanwhile, the fruit and vegetable price index was 0.8% lower as fresh produce fell in price: apples were priced 3.5% lower than in July, prices for oranges fell 1.9%, potatoes were 4.0% cheaper, and lettuce and tomato prices both fell 1.7%.  Prices for the beverage group were lower by 0.2% as a 1.9% increase in the price of roast coffee and 0.2% higher juice prices were more than offset by 1.4% lower prices for instant coffee, 1.2% lower tea prices, and 0.4% lower prices for carbonated drinks.  Finally, prices for other foods at home also fell 0.2% as increases of 1.8% in the price of butter was offset by 0.6% lower prices for olives, pickles, and relishes, 0.2% lower prices for frozen dinners and 1.0% lower prices for other miscellaneous foods. However, combined with increases of 4.1% in June and 2.8% in July, butter prices are now 18.8% higher than they were last August...

For the seasonally adjusted core components of the CPI, which netted out as unchanged, we find that the grouping of all commodities less food and energy commodities fell by 0.1% in August, while overall services less energy services were statistically unchanged.  The index for shelter, which is almost 32% of the CPI, rose by 0.2%, with rent of shelter and homeowner's equivalent rent both rising 0.2%, while prices for lodging away from home rose 0.8%, and water & sewer bills and the cost of household operations all rose 0.3%. Meanwhile, household furnishings and supplies, the commodity component of housing, fell by 0.1% with prices for window and floor coverings 1.5% lower, living room, kitchen and dining room furniture 1.2% lower, and appliances 0.9% lower. The price index for apparel fell 0.2% in August after 3 monthly increases as a 4.5% decrease in prices for boy's apparel, a 4.0% decrease in prices for men's shirts and sweaters, and a 3.0% decrease in prices for girl's clothing were only partially offset by a 4.6% increase in prices for women's outerwear..  The aggregate index for medical care, meanwhile, was unchanged in August as the medical care commodity index fell 0.1% after rising 1.0% over the previous two months, as non-prescription drug prices fell 0.7%, while the medical care service index was unchanged, as 0.3% decreases in both outpatient hospital services and prices for health insurance was offset by a 0.4% increase in prices for physicians' services and 0.6% higher charges for nursing homes and adult day services.  Then, while the transportation composite index showed a 1.5% decrease, that index includes gasoline, which you'll recall fell in price by 4.1%; prices for transportation commodities less fuel prices, however, were unchanged, as prices for new cars and trucks rose 0.2%, prices for used cars & trucks fell 0.3%, and the price of tires fell 0.2%.  However, the transportation services index fell 0.6% on a 4.7% cut in airline fares and a 2.3% drop in prices for car and truck rentals.. Meanwhile, the recreation price index fell 0.4% as recreation commodities fell 0.3% on 1.0% decrease in prices for audio equipment and 0.9% lower prices for pets and pet products, while recreation services fell 0.5% on a 1.6% decrease in rental of video and audio media and 0.7% declines in sports club dues and admissions to sporting events, which was only partially offset by a 1.1% increase in photographer's fees and 0.5% higher film processing pricing.  Finally, the aggregate education and communication index was down 0.1% as education and communication commodities fell 0.1% as a 1.3% decline in prices for personal computers and peripheral equipment offset a 2.2% increase in prices for college textbooks, while education and communication services also fell 0.1% on a 0.5% decrease in college tuition and fees that was only partially offset by a 0.4% increase in postage and delivery services.  Other than the aforementioned increases in meat and butter prices, the only other line items among CPI components that showed annual price changes greater than 10% were women's outerwear, which was 19.0% higher than in August 2013, video discs and similar media, prices for which have fallen 11.4%, and televisions, which are now 14.2% cheaper than they were a year earlier...

Our FRED graph below shows the overall change in each of the major component indexes of the CPI since January 2000, with all indexes reset to 100 as of that month for an apples to apples comparison of the price changes in each.  In blue, we show  the relative track of the price index for food and beverages; in bright green, we show the reset price index for all housing components, which includes rent, homeowners equivalent rent, utilities, insurance & household maintenance; in red, we have the price changes for apparel, the only index to show a net price decline over the previous decade; while the relative change in the price index for medical care shown in violet has obviously seen the greatest price increase over the period. Next, the transportation price index is in orange, and shows the impact of volatile fuel prices on the cost of transportation, while the price change for education and communication over the period is tracked in brown, and in dark green is the relative strength of the index for recreation prices.. Finally, we’ve added the track of the overall CPI-U in black, which tends to track close to the large housing component, which makes up 41.5% of the total index. This graph can also be viewed as an interactive, wherein you can track the monthly changes in all of these relative price indexes by dragging your cursor across the graph…

August 2014 CPI components

(the above excerpted from my weekly summary at MarketWatch 666)

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Comments

gas has dropped further, except for some states

The fact prices are very uneven depending on states seems odious. Thanks for writing this up! I am back and am just starting to work on the site. I have a family thing that took up all of my time, on top of the "cannot rely on the Fed" disaster.

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been busy too

i've been trying to get over here with coverage when i can, but this summer has been one major project after another...just finished a bathroom remodel, now i have to get a new barn built before winter...i should be able to contribute weekly come November...

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rjs