Econoday Economic Report: Consumer Price Index October 15, 2009

Resource Center » Event Release Dates | Event Definitions | Today's Calendar

Consumer Price Index

Released On 10/15/2009 8:30:00 AM For Sep, 2009

	Prior	Consensus	Consensus Range	Actual
CPI - M/M change	0.4 %	0.1 %	0.0 % to 0.3 %	0.2 %
CPI - Y/Y change	-1.4 %			-1.3 %
CPI less food & energy	0.1 %	0.1 %	0.1 % to 0.2 %	0.2 %
CPI less food & energy - Y/Y change	1.5 %			1.5 %

Highlights
Consumer price inflation in September was mixed as the overall CPI slowed while the core rate firmed. The headline CPI rate eased to a 0.2 percent gain after jumping 0.4 percent in August. The consensus had expected a 0.1 percent uptick for the latest month. The slowing was due to a dip in food prices and a dramatically slower gain in energy costs. Core CPI inflation firmed slightly, rising 0.2 percent after a 0.1 percent increase in August. The latest number came in a little above the market forecast for a 0.1 percent rise.

Helping to soften the headline number, the food component declined 0.1 percent after a 0.1 percent rise the month before. The energy component slowed to a 0.6 percent boost in September, following a sharp 4.6 percent jump in August. Gasoline posted a modest 1.0 percent gain in the latest month after a 9.1 percent spike in August.

The moderately faster pace for the core rate was due to relatively strong gains in lodging away from home, medical care, new vehicles, used cars and trucks, and public transportation. The core rate firmed despite declines in rent and owners' equivalent rent, the first decreases in those indexes since 1992.

Year-on-year, headline inflation edged up to minus 1.3 percent (seasonally adjusted) from down 1.4 percent in August. The core rate was unchanged at up 1.5 percent in September. On an unadjusted year-ago basis, the headline number was down 1.3 percent in September while the core was up 1.5 percent.

Overall, inflation remains subdued despite slightly disappointing numbers in today's report. The weakening in housing costs especially points to a sluggish trend for inflation in the near term unless energy costs pick up.

At the time of the release, Treasury yields firmed but largely due to a stronger-than-expected Empire State manufacturing index and lower-than-forecast jobless claims. Equity futures were little changed.

Market Consensus before announcement
The consumer price index jumped 0.4 percent in August after no change in July. In the latest month, energy costs spiked 4.6 percent after a 0.1 percent dip in July while food inflation firmed to up 0.1 percent from down 0.3 percent in July. However, core CPI inflation remained steady with a 0.1 percent gain. The cash-for-clunkers tax credits helped push prices for new vehicles down by 1.3 percent. Apparel slipped 0.1 percent. Looking ahead, the September headline CPI should be relatively tame as gasoline prices have eased.

Definition
The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. That is the index shows the change in price levels since the index base period, currently 1982-84 = 100. Monthly changes in the CPI represent the rate of inflation. Why Investors Care

It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the CPI are mainly volatile because of sharp fluctuations in food and energy prices. The core CPI eliminates the sharper fluctuations.
Data Source: Haver Analytics

Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core CPI does not fluctuate as much as the total CPI.
Data Source: Haver Analytics

2009 Release Schedule

Released On: 1/16 2/20 3/18 4/15 5/15 6/17 7/15 8/14 9/16 10/15 11/18 12/16

Release For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov