2015 Economic Calendar
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Consumer Price Index  
Released On 2/26/2015 8:30:00 AM For Jan, 2015
PriorPrior RevisedConsensusConsensus RangeActual
CPI - M/M change-0.4 %-0.3 %-0.6 %-0.8 % to -0.2 %-0.7 %
CPI - Y/Y change0.7 %0.7 %-0.2 %
CPI less food & energy- M/M change0.0 %0.1 %0.1 %0.1 % to 0.2 %0.2 %
CPI less food & energy - Y/Y change1.6 %1.6 %1.6 %
CPI - level236.149 index level
Core CPI - level239.339 index level

The negative trend at the headline level continues-thanks to the drop in energy. Overall consumer price inflation fell a sharp 0.7 after declining 0.3 percent in December. The January number was slightly below the consensus figure of down 0.6 percent. Energy plunged 9.7 percent after dropping 4.7 percent in December. Gasoline plummeted 18.7 percent, following a 9.2 percent fall in December. Food posted at unchanged, following a rise of 0.2 percent in the previous month. Excluding food and energy, consumer price inflation firmed to a 0.2 percent after a modest 0.1 percent rise December. Analysts forecast a 0.1 percent gain.

The shelter index rose 0.3 percent, and the indexes for personal care, for apparel, and for recreation increased as well. The medical care index was unchanged, while an array of indexes declined in January, including those for household furnishings and operations, alcoholic beverages, new vehicles, used cars and trucks, airline fares, and tobacco.

On a seasonally adjusted basis, the headline CPI was down 0.2 percent on a year-ago basis versus 0.7 percent in December. Excluding food and energy, the year-ago rate was 1.6 percent, matching the previous month.

The January report-with the energy based drop at the headline level-fits into Fed chair Janet Yellen description of headline inflation as transitory. But for now, the consumer is gaining more discretionary income and businesses with lower costs.

Consensus Outlook
The consumer price index fell another 0.4 percent in December after falling 0.3 percent November. The December figure matched market expectations for a 0.4 percent drop and was the largest decrease since 2008. Energy plunged 4.7 percent after dropping 3.8 percent in November. Gasoline dropped a huge 9.4 percent, following a plunge of 6.6 percent in November. Food, however, gained 0.3 percent, following a rise of 0.2 percent in the previous month. Excluding food and energy, consumer price inflation slowed to unchanged after a modest 0.1 percent in rise November. Analysts projected a 0.1 percent gain.

Within the core, the shelter index continued to rise (up 0.2 percent), and the index for medical care posted its largest increase (up 0.5 percent) since August 2013. However, these increases were offset by declines in a broad array of indexes including apparel, airline fares, used cars and trucks, household furnishings and operations, and new vehicles.

On a seasonally adjusted basis, the headline CPI was up year-ago 0.7 percent versus 1.3 percent in November. Excluding food and energy, the year-ago rate was 1.6 percent, compared to 1.7 percent the previous month.

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. Monthly changes in the CPI represent the rate of inflation for the consumer. Annual inflation is also closely watched.

The consumer price index is available nationally by expenditure category and by commodity and service group for all urban consumers (CPI-U) and wage earners (CPI-W). All urban consumers are a more inclusive group, representing about 87 percent of the population. The CPI-U is the more widely quoted of the two, although cost-of-living contracts for unions and Social Security benefits are usually tied to the CPI-W, because it has a longer history. Monthly variations between the two are slight.

The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas. The regional and city CPIs are often used in local contracts.

The Bureau of Labor Statistics also produces a chain-weighted index called the Chained CPI. This measures a variable basket of goods and services whereas the regular CPI-U and CPI-W measure a fixed basket of goods and services. The Chained CPI is similar to the personal consumption expenditure price index that is closely monitored by the Federal Reserve Board.  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

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