2017 Economic Calendar
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Released On 1/18/2017 8:30:00 AM For Dec, 2016
PriorConsensusConsensus RangeActual
CPI - M/M change0.2 %0.3 %0.2 % to 0.5 %0.3 %
CPI - Y/Y change1.7 %2.1 %
CPI less food & energy- M/M change0.2 %0.2 %0.1 % to 0.3 %0.2 %
CPI less food & energy - Y/Y change2.1 %2.2 %

Energy prices are moving higher and are lifting the overall rate of consumer inflation, which now nearly matches the core rate (less food & energy). The CPI rose 0.3 percent in December to lift the year-on-year rate by 4 tenths to 2.1 percent. This yearly rate had been badly trailing the core rate for the past 2-1/2 years, since the oil price collapse in the summer of 2014. Now the overall rate compares with 2.2 percent for the core rate which rose a modest 0.2 percent in December.

Energy prices, up 1.5 percent in the month, posted their fourth straight strong monthly gain with the yearly rate now well above overall inflation at 5.4 percent. Medical care has been a consistent source of strength though recent readings have been fading, up only 0.2 percent in December for a yearly 4.1 percent. Housing is another area of strength, up a tangible 0.3 percent in the month and at 3.0 percent year-on-year. Owners' equivalent rent, which is a closely watched subcomponent of housing, also rose 0.3 percent.

Food prices have been soft, unchanged in December and in the negative column on the year, at minus 0.2 percent. Apparel prices, down 0.7 percent in December for a yearly minus 0.1 percent, have also been weak and help explain the low dollar sales at the nation's clothing chains during the holidays.

The coming on of energy prices is pulling up overall prices where however pressure is still moderate. This report, despite the areas of softness, will likely make uneasy reading for the inflation hawks.

Consensus Outlook
Consumer prices have not been showing much traction, running just below a 2 percent yearly rate and only a little bit above 2 percent excluding food & energy. Monthly gains for both readings were only 0.2 percent in November and forecasters don't see much improvement for December, at a consensus 0.3 percent overall and 0.2 percent excluding food & energy. Low rates of consumer inflation will allow the Fed to be patient when raising rates this year.

The Consumer Price Index is a measure of the change in 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 for the consumer. Annual inflation is also closely watched.

The consumer price index is available nationally by expenditure category and by commodity and service group for all urban consumers (CPI-U) and wage earners (CPI-W). All urban consumers are a more inclusive group, representing about 87 percent of the population. The CPI-U is the more widely quoted of the two, although cost-of-living contracts for unions and Social Security benefits are usually tied to the CPI-W, because it has a longer history. Monthly variations between the two are slight.

The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas. The regional and city CPIs are often used in local contracts.

The Bureau of Labor Statistics also produces a chain-weighted index called the Chained CPI. This measures a variable basket of goods and services whereas the regular CPI-U and CPI-W measure a fixed basket of goods and services. The Chained CPI is similar to the personal consumption expenditure price index that is closely monitored by the Federal Reserve Board.  Why Investors Care
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.
Data Source: Haver Analytics
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

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