2017 Economic Calendar
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Released On 6/14/2017 8:30:00 AM For May, 2017
PriorConsensusConsensus RangeActual
CPI - M/M change0.2 %0.0 %-0.1 % to 0.1 %-0.1 %
CPI - Y/Y change2.2 %2.0 %1.9 % to 2.1 %1.9 %
CPI less food & energy- M/M change0.1 %0.2 %0.1 % to 0.3 %0.1 %
CPI less food & energy - Y/Y change1.9 %1.9 %1.8 % to 2.0 %1.7 %

Consumer inflation remains very soft at minus 0.1 percent in May with the ex-food & energy core rate at plus 0.1 percent, both 1 tenth lower than consensus expectations.

Fundamental cost areas are unquestionably weak with housing up only 0.2 percent and medical care unchanged and continuing its weak run this year. Education & communication is also weak, unchanged and continuing to reflect discounting among telecom providers. Major declines were posted for energy, down 2.7 percent and including a 6.4 percent decline for gasoline, and also apparel, down 0.8 percent for a third straight decrease, and also transportation, down 1.4 percent and reflecting a decline in new vehicle prices.

Year-on-year rates are also lower than expected, at 1.9 percent overall and at only 1.7 percent for the core which is noticeably 2 tenths below the consensus.

Inflation, lacking any boost from wages, just can't find any traction and is beginning to trend lower, not higher. These results, though very weak and released with a similarly weak retail sales report, won't unsettle expectations for a rate hike at this afternoon's FOMC. They do, however, underscore second-quarter weakness and will have an effect on expectations for future Fed rate hikes.

Consensus Outlook
Consumer prices proved unexpectedly weak in both March and, despite an upturn in producer prices, in April as well. April's weakness included medical care and once again communications where providers are in a price war. Econoday's consensus for consumer prices in May calls for no monthly change at the headline level (vs a 0.2 percent increase in April) with the year-on-year rate seen slipping to 2.0 percent (vs 2.2 percent). Energy doesn't look to be a major factor in May though the less food & energy is seen rising 0.2 percent (vs 0.1 percent) with this yearly rate, however, unchanged at 1.9 percent.

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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