–August CPI +0.3%; Core 0.0%; Shelter 0.0%
–No Evidence Corn, Wheat and Soybean Price Hikes Hitting Consumer

By Denny Gulino

WASHINGTON (MNI) – With rents flat to negative again, the
heavily-weighted shelter index kept the August CPI core rate unchanged,
while seasonal adjustment added the expected weight to gasoline prices.

The Bureau of Labor Statistics Friday reported the Consumer Price
Index rose 0.3%, making the adjusted annualized rate of inflation for
the year so far just 0.6% — in sharp contrast to the 3.0% rate last
year at this time.

The core rate came in unchanged when a tenth increase was
expected. The predominant influence on the core rate was the shelter
component, which was unchanged, senior BLS analyst Steve Reed told
Market News International just prior to the report’s public release.

The CPI’s measure of the cost of a residence, owners’ equivalent
rents, alone makes up 25% of the entire CPI and it was unchanged. The
other measure of rents, which is rent of primary residences, was down
0.1%, it’s first outright decline since November.

The 12-month rate of change for the shelter category was down 0.7%
through August, the fourth month it’s been in negative territory.
Lodging away from home, the volatile measure of hotel and vacation
rental costs, dropped 1.3% in August.

“Overall, we’re at around 1%,” Reed said, referring to the trend in
annual rates for major categories. “It just shows where we’re at.” In
fact the 12-month change for food costs was exactly 1.0% through August.
Energy was 3.8%. And the 12-month change for the entire CPI was 1.1%
through the latest month.

The strong acceleration in corn, wheat and soybean prices reflected
at the beginning of the Producer Price Index supply pipeline, reported
Thursday, is not evident in the CPI. “I was looking for that but we
didn’t see any evidence it’s hit consumers yet,” he said.

Food prices in August rose just 0.2% and food at home was
unchanged.

Medical care for consumers cost just 0.2% more in August after a
0.1% decline in July. Once the category showing the most consistent
strong price pressure, the 12-month rate for medical care through August
slackened to 3.2%.

The energy index rose 2.3% after seasonal adjustment and was up
just 0.1% before adjustment. Gasoline rose 3.9% after adjustment and the
actual unadjusted change in August was only a 0.4% increase.

Apparel turned down 0.1% after three previous months of increase.

The 12-month change in the core rate has held steady at 0.9% for
five months in a row, the report said. Used cars and trucks have been
leading on the upside, up 15.5%, along with airline fares, up 8.7% in a
year. Largely offsetting the increases have been shelter, household
furnishing, recreation and apparel, all down for a year.

Expectations in a Market News International survey centered on a
increase of 0.3% for August and a CPI core rate up 0.1%.

** Market News International Washington Bureau: 202-371-2121 **

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