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Brent Meyer |

Economist

Brent Meyer

Brent Meyer is a former economist of the Federal Reserve Bank of Cleveland.

07.25.08

Economic Trends

June Price Statistics

Michael F. Bryan and Brent Meyer

The CPI rose at an annualized rate of 13.4 percent in June, outpacing all of its longer-term trends and pushed up by a 116.3 percent spike in energy prices and a 9.6 percent increase in food prices. The CPI excluding food and energy (core CPI) rose 3.9 percent during the month, its largest monthly increase since November 2001. Both the median and trimmed-mean measures were elevated as well, rising 4.6 percent and 5.4 percent, respectively. Price pressures were not just restricted to consumers in June, as the Producer Price Index (PPI) jumped 23.8 percent during the month. Over the past 12 months, the PPI has increased 9.1 percent, its largest growth rate in 27 years. Excluding food and energy, the PPI increased 2.9 percent in June, compared to 4.5 percent over the past 6 months.

June Price Statistics

    Percent change, last
    1mo.a 3mo.a 6mo.a 12mo. 5yr.a 2007 avg.
Consumer Price Index
  All items
13.4
7.9
5.5
5.0
3.6
4.2
  Less food and energy
3.9
2.5
2.3
2.4
2.2
2.4
  Medianb
4.6
3.2
3.1
3.1
2.8
3.1
  16% trimmed meanb
5.4
4.0
3.5
3.2
2.6
2.8
Producer Price Index
  Finished goods
23.8
14.1
12.4
9.1
5.0
7.1
  Less food and energy
2.9
3.7
4.5
3.1
2.1
2.1

a. Annualized.
b. Calculated by the Federal Reserve Bank of Cleveland.
Sources: U.S. Department of Labor, Bureau of Labor Statistics; and Federal Reserve Bank of Cleveland.

Digging deeper into the price-change distribution, we see that nearly two-thirds of the CPI’s components increased at rates exceeding 3.0 percent, with 45 percent rising at rates greater than 5.0 percent. Over the 12 months prior to this report, only 23.6 percent of the CPI’s components increased at rates greater than 5.0 percent on average. Of the 45 components that the Federal Reserve Bank of Cleveland uses to compute the median CPI, 10 increased at an annualized rate of 10.0 percent or greater.

The longer-term trend (the 12-month percent change) in all consumer price measures ticked up during the month. Since August 2007, the longer-term trend in the CPI has increased from 2.0 percent to 5.0 percent today. Over the past 12 months, the median CPI has increased 3.1 percent, while the 16 percent trimmed mean is up 3.2 percent.

The prices of both core goods (goods excluding food and energy commodities) and core services (services excluding energy services) jumped up in June, increasing 1.3 percent and 5.0 percent, respectively. Over the past 12 months, core services prices are up 3.3 percent, while core goods are only up 0.2 percent on a year-over-year basis.

Average inflation expectations, as measured by the University of Michigan’s Survey of Consumers, have been holding near recent highs. One-year-ahead average inflation expectations increased 0.4 percentage point to 6.9 percent, according to the preliminary report for July. Longer-term (5–10 year-ahead) average expectations ticked down to 3.8 percent in July from 4.0 percent in June, but this is still above the series’ recent trend.