Econoday Report: Consumer Price Index 16, 2005

2009 Economic Calendar
POWERED BY
Resource Center » U.S. & Intl Recaps \| Release Dates \| Why Investors Care \| Today's Calendar

Consumer Price Index

Definition
The Consumer Price Index is a measure of 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. Why Investors Care

Released on 8/16/05 For Jul 2005

CPI, M/M change
Actual	0.5%
Consensus	0.4%
Consensus Range	0.3% to 0.5%

CPI less food & energy, M/M change
Actual	0.1%
Consensus	0.1%
Consensus Range	0.1% to 0.3%

Highlights
Consumer prices rose a sharp 0.5% in July, inflated by a 6.1% month-to-month spike in gasoline. But excluding gas and excluding a 0.2% rise in food prices, core prices rose only 0.1%.

New vehicle prices fell an adjusted 1.0% in July (or down 1.3% unadjusted), reflecting aggressive incentives in the month. In contrast, used car prices jumped 0.8%. Many other categories also showed pressure: medical costs were up 0.4% as were prescription drugs and housing costs; education was up 0.6%. Apparel prices dropped 0.9% in the month, reflecting seasonal discounting.

Rising fuel costs have yet to have a noticeable impact on final inflation. How long this will last is a question for Federal Reserve officials. It will be interesting to see if August's CPI will show similar results. Gas is up another 20 cents this month, now past $2.50 per gallon.

Financial markets showed little reaction to the data. Despite high gas prices and despite strong economic growth, inflation appears to be only a background threat. The effects of high fuel costs are likely to be more evident in tomorrow's PPI report.

Market Consensus Before Announcement
The consumer price index was unchanged in June as energy prices fell 0.5 percent. Energy prices are expected to post a big gain in July. The core CPI (excluding food and energy prices) inched up 0.1 percent in June; economists are not looking for major changes in July.

CPI Consensus Forecast for July 05: 0.4 percent
Range: 0.3 to 0.5 percent

CPI ex food & energy Consensus Forecast for July 05: 0.1 percent
Range: 0.1 to 0.3 percent

Trends

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.

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

2005 Release Schedule

Released On: 1/19 2/23 3/23 4/20 5/18 6/15 7/14 8/16 9/15 10/14 11/16 12/15

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