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US: Consumer prices (February 2008)

Mon, Mar 17 2008, 10:04 GMT
by Marcial Nava

BBVA Bancomer

• • Headline CPI remained unaltered in February, favored by a 0.5% decrease in energy prices
  

• • Core prices were also unchanged, core services inflation softened while core commodity prices fell
  

• • We expect core CPI inflation to ease in the next months, as economic growth decelerate

Core CPI flattened in February, following a 0.3% increase in the previous month. On a year-over-year basis, core inflation eased to 2.3% (from 2.5% in January), similar to the average of 2007. Core CPI inflation rose by a three-month annualized rate of 2.3% from 2.5% in November 2007.

Core inflation may be experience the effects of a slower demand

Core services inflation (72% of total core inflation) eased to 0.1 % from 0.4% in January; among its main contributors, the owners’ equivalent rent index (OER) softened to 0.1% from 0.3% in January. OER inflation was 2.7% y-o-y, the lowest since February 2007. As we noted in previous releases, housing oversupply is helping to reduce pressures on OER and shelter. This trend may continue as suggested by the current situation of the housing market. Both, transportation and medical services inflation moderated to 0.1% from 0.5 and 0.6% respectively in January. Prices increases in the core services group were partially compensated by a 1.2% decline in prices of lodging away from home.

Core commodity prices (28.2% of core CPI) decreased 0.1% (from 0.2% gain in January) as prices of durable goods declined 0.2%. On a year-overyear basis, core commodities prices were unchanged, following a gain of 0.1% in January, which was the highest rate since October 2006.

Headline inflation remained unchanged

Headline consumer prices showed no change in February. A 0.5% drop in energy prices –caused by a 2% drop in gasoline prices- was offset by a 0.4% increase in food prices. Despite this good news on the energy side, pressures are likely to continue going forward. The average price of gasoline edged up 4.7% in March, reaching an average of $3.21 dollars per gallon.

We expect core inflation to recede favored by slower economic growth; however, upside risks from energy and food persist

February CPI readings suggest that core inflation probably reached a peak early in this year. We expect it to slow down in the coming months as the rate of resources utilization diminish. In the near-term, stubbornly high energy and food prices continue to be risky; however, they are likely to reduce its pace in tandem with the economic cycle.

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Published on  Mon, Mar 17 2008, 10:04 GMT

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US: Consumer prices (January)

Thu, Feb 21 2008, 08:07 GMT
by Luis Arregoces

BBVA Bancomer

• • Core prices increased in a year-over-year basis, more than expected, by 2.5 percent in January, up from 2.4 percent in December
  
• • Headline consumer prices increased at a seasonally adjusted annual rate of 6.8 percent in the last three months
  
• • One of the largest contributors to the overall increase in price levels continued to be the energy index , which rose by 19.6 percent in the last twelve months
  

In January, consumer prices were 4.3 percent higher than a year ago, before seasonal adjustment. This is the largest 12-month increase since June 2006, when the CPI-U reached 4.2 percent. On a seasonally adjusted basis, the CPI-U increased 0.4 percent in January following a 0.4 percent increase in December, according to the Bureau of Labor and Statistics latest release. In addition, the CPI-W (Index for Urban Wage Earners) increased by 0.4 percent in January, on a seasonally adjusted basis, and it was 4.6 percent higher than a year ago.


The index for energy rose by 0.7 in January following a 1.7 percent increase in December. The index for energy commodities rose by 1.4 percent while the food index increased by 0.7 percent, up from 0.1 percent in the previous month, contributing more to overall inflation in January compared to last month.


The consumer price index excluding food and energy increased by 0.3 percent in January, up from 0.2 percent in December; on year over year basis core CPI increased by 2.5 percent in January, before seasonal adjustment; this is consistent with a scenario of moderate inflation expectations.

In addition, the slight upward movement on core inflation readings is, mainly, due to a higher index for shelter combined with a small increase in the index for apparel during the last month. Overall, headline consumer prices are gaining some momentum but core inflation appears to be contained.


Our current forecast for February includes a scenario of moderation of energy prices, consistent with a 4.1 percent year-over- year rate. We expect core inflation to increase by 2.4 percent in February.


Going forward our assessment of inflation risks remains tilted towards the upside given an environment of high commodities and oil prices, along with dollar weakness and slower corporate profit growth, higher core producer prices, and moderate wage inflation.

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Published on  Thu, Feb 21 2008, 08:07 GMT

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US: Consumer prices (December)

Thu, Jan 17 2008, 08:20 GMT
by Luis Arregoces

BBVA Bancomer




• · Core prices increased in a year-over-year basis, more than expected, by 2.4 percent in December, up from 2.3 percent in November
• · Headline consumer prices increased at a seasonally adjusted annual rate of 5.6 percent in the fourth quarter of 2007
• · One of the largest contributors to the overall increase in price levels continued to be the energy index , which rose by 17.4 percent in 2007 compared to 2.9 percent increase in 2006, after seasonal adjustment
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Published on  Thu, Jan 17 2008, 08:20 GMT

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US: Consumer prices (November)

Mon, Dec 17 2007, 08:25 GMT
by Luis Arregoces

BBVA Bancomer




• · Core prices increased in a year-over-year basis, more than expected, by 2.3 percent in November, up from 2.2 percent in October
  
• · Consumer prices increased at a seasonally adjusted annual rate of 4.2 percent during the first eleven months of 2007 compared to 2.6 percent during 2006
  
• · One of the largest contributors to the overall increase in price levels was the energy index , which rose by 18.1 percent in the first eleven months of 2007 compared to 2.9 percent increase in 2006, after seasonal adjustment
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Published on  Mon, Dec 17 2007, 08:29 GMT

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This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.