2017 Economic Calendar
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Released On 3/15/2017 8:30:00 AM For Feb, 2017
PriorConsensusConsensus RangeActual
CPI - M/M change0.6 %0.1 %0.0 % to 0.2 %0.1 %
CPI - Y/Y change2.5 %2.7 %2.6 % to 2.8 %2.7 %
CPI less food & energy- M/M change0.3 %0.2 %0.0 % to 0.3 %0.2 %
CPI less food & energy - Y/Y change2.3 %2.2 %2.2 % to 2.3 %2.2 %

Consumer prices are inching ahead while the key year-on-year tally is getting a special lift from an easy 2016 comparison. Consumer prices rose only 0.1 percent as was expected with the core also coming in as expected with a 0.2 percent gain.

But the overall year-on-year rate continues to climb, up 2 tenths to 2.7 percent that is not only well above the general 2 percent line but was last matched nearly 5 years ago, in March 2012. But the core rate, which excludes energy where the easy comparison lies, is steady, at 2.2 percent.

Energy prices fell a very sharp 1.0 percent in the month of February with gasoline down 3.0 percent. Yet year-on-year rates are still very strong, at plus 15.2 percent for overall energy and plus 30.7 percent for gasoline. These are the gains that are pushing up the headline year-on-year rate.

Other readings of note are strong gains for recreation and also apparel, which both rose 0.6 percent in the month, and a modest gain of 0.2 percent for food. Medical care rose only 0.1 percent with this closely watched year-on-year rate at plus 3.5 percent. Housing posted a third straight 0.3 percent monthly gain for a yearly 3.2 percent.

By themselves, consumer prices are not pointing to an inflationary flashpoint though energy prices are a concern. What is a greater concern for the inflationary picture is the risk that wage gains, against full employment, will begin to kick in. This is the concern that will get attention at today's FOMC meeting.

Consensus Outlook
Significant pressure in January consumer prices foretold significant pressure in the Federal Reserve's PCE price target. But moderation, tied in part to lower gasoline prices, is the call for the February consumer price index which is expected to slow from January's 0.6 percent to 0.1 percent in February. When excluding food & energy, only a 0.2 percent gain is expected, down from 0.3 percent in January. Year-on-year rates are mixed with the total CPI seen rising 2 tenths to 2.7 percent but the core down 1 tenth to 2.2 percent. Lower readings in this report would help ease concern that inflation pressures are suddenly building and may overshoot the Federal Reserve's plans.

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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