It"s The Economy Stupid: CPI, Not So Much

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Consumer Price Index MoM	DEC	0.0%	0.0%	-0.3%
CPI Ex Food & Energy MoM	DEC	0.2%	0.1%	0.1%
Consumer Price Index YoY	DEC	1.8%	1.7%	1.8%
CPI Ex Food & Energy YoY	DEC	1.9%	1.9%	1.9%
Consumer Price Index NSA	DEC	231.416	231.475	231.254
CPI Core Index SA	DEC	229.726	229.601	230.601

 

Sooo, okay, CPI, Consumer Price Index, less than 2%.  Annual.  Not so much.  That about sums it up.

 

But for those of you who want details, here you go. 

 

Consumer Prices in U.S. Little Changed as Inflation Recedes. The cost of living was little changed in December, capping the third-smallest annual gain in the past decade, indicating U.S. inflation remains at bay.

 

The unchanged reading in the consumer-price index matched the median estimate of 83 economists surveyed by Bloomberg and followed a 0.3 percent drop the prior month. Costs rose 1.7 percent in 2012, down from a 3 percent increase in 2011.

 

Bloomberg survey estimates for the consumer-price index ranged from a drop of 0.2 percent to an increase of 0.3 percent.

 

Decade Average

 

Consumer prices rose 2.4 percent on average over the past decade.

 

The core index, which excludes volatile food and energy costs, climbed 0.1 percent for the fifth time in the last six months. For 2012, core prices rose 1.9 percent compared with a 2.2 percent advance in 2011. Last year’s gain matched the average increase over the past 10 years.

 

The Fed’s preferred price measure, which is tied to consumer spending patterns, rose 1.4 percent in the 12 months to November, according to data from the Commerce Department.

 

Inflation Outlook

 

Fed Chairman Ben S. Bernanke said earlier this week tried to assuage investors that the central bank will remain vigilant against any flare-up in prices. The core measure last month was restrained by declines in

the cost of used cars, clothing and medicinal drugs.  Tepid global growth and falling energy costs, including cheaper gasoline, are mitigating inflation risks. Energy costs decreased 1.2 percent in December. Gasoline fell 2.3 percent.

                       

Other Measures

 

The CPI is the broadest of three monthly price measures from the Labor Department because it includes goods and services. About 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.  Wholesale prices in the U.S. dropped for a third month in December as food costs fell by the most since May 2011, the Labor Department reported yesterday. For all of 2012, prices paid by companies climbed 1.3 percent, the smallest advance since a drop in 2008 and compared with an average 3.4 percent gain over the prior decade. Import prices also declined in  December, a Labor Department report showed Jan. 11. For all of 2012, import prices fell 1.5 percent, the first annual drop since they retreated 10.1 percent in 2008.

 

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury