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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, 08:17 GMT




Archive

• US: Consumer prices (February 2008)
  Published On Mon, Mar 17 2008, 10:04 GMT
• US: Consumer prices (January)
  Published On Thu, Feb 21 2008, 08:07 GMT
• US: Consumer prices (December)
  Published On Thu, Jan 17 2008, 08:20 GMT
• US: Consumer prices (November)
  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.