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Wednesday, August 16, 2006

The CPI Report

The CPI data are consistent with the PPI release yesterday:

CPI data show US inflation easing, by Daniel Pimlott, Financial Times: The cost of living for US consumers, excluding energy and food, rose less quickly in July than it did for the previous four months, data published on Wednesday show. The figures provide further evidence that inflationary pressures in the US economy are slowing and support the Fed’s decision last week to keep interest rates steady.

Core consumer prices, which exclude volatile energy and food items, rose by 0.2 per cent last month, less than the 0.3 per cent they rose by between March and June. The headline consumer price figure rose 0.3 per cent, below expectations of a 0.4 per cent rise. Energy costs, which fell 0.9 per cent in June, advanced 2.9 per cent in July. ...

Meanwhile, in separate data, home construction in the US fell last month to the lowest level in almost two years and industrial production grew at a slower than expected rate. ...

The data shows rises in housing and transportation costs, but prices of clothing and shoes fell sharply. Housing costs account for about 40 per cent of the measures included in the index. “A sharp drop in the index for apparel was largely responsible for the smaller increase in July,” the Bureau of Labor Statistics, which compiles the figures, said in a statement.

The NY Times says:

Consumer Inflation Accelerated in July, AP/NY Times: Consumer inflation accelerated in July, reflecting a big jump in gasoline and other energy prices. In evidence that the economy is slowing, industrial output in July slipped to just half the June pace.

The Labor Department reported Wednesday that its closely watched Consumer Price Index rose by 0.4 percent last month, double the 0.2 percent increase in June. While energy costs had fallen in June, they rose by 2.9 percent last month, the biggest increase in three months. ...

Core inflation, which excludes food and energy, slowed in July, rising by just 0.2 percent after four straight months of 0.3 percent gains. This slowdown, which was helped by a 1.2 percent drop in clothing prices, was likely to encourage officials at the Federal Reserve.

Update: Michael Mandel at Economics Unbound adds:

Real wages still falling, by Michael Mandel, Economics Unbound: Despite today's cheerier inflation number, real wages are still falling. The BLS reports that real hourly earnings are down by about a half percentage point since February. This is not good. And blaming it solely on oil prices doesn't help, because it looks like the increase in oil prices is going to stick.

Update: David Altig has more, and it's not great news.

    Posted by on Wednesday, August 16, 2006 at 07:28 AM in Economics, Monetary Policy | Permalink  TrackBack (0)  Comments (10)

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