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2008 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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The Consumer Price Index is a measure of 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. Why Investors Care
| Released on 5/17/06 For Apr 2006 | |||||||||||||||||||||||||
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Highlights
Inflation at the consumer level definitely heated up in April in what could prove trouble for Federal Reserve policy makers and for the financial markets. Overall consumer price inflation rose 0.6% in the month to a year-on-year rate of 3.5%, similar results to yesterday's producer price report. But the CPI showed more pressure at the core level, rising a hot 0.3% for a second straight month that put the year-on-year rate at 2.3%, vs. 2.1% in March and beyond the 1.5% level for the PPI. The rate is also beyond the Fed's 2.0% outer comfort zone. The Bureau of Labor Statistics (BLS) underscored the trouble saying it is seeing "upward" movement in the core. Bonds dipped and the dollar firmed in what appeared to be only a modest initial reaction to the data.
Food prices were unchanged in the month, but apparel took off with a 0.6% rise. Note that apparel retailers posted strong sales in the month helped by unusually warm weather. Medical care as usual was higher, with a 0.4% rise that reflected a big 0.8% spike in hospital care, with gains also posted in recreation and education & communication. The BLS noted that shelter, up 0.3%, increased for a third straight month, with rent inflation a big factor behind the core increase.
Energy was the hot spot of course, showing a 3.9% rise and a stinging year-on-year rate of 16.9%. Gasoline was up 8.8% in the month with a year-on-year increase of 21.5%. Excluding all energy prices, the CPI was up a subdued 0.2% in the month.
But consumers can't do without energy, which is making up a bigger and bigger share of everyone's monthly costs. The big run-up in energy prices over the past year has remained remarkably contained, that is having had little effect on prices of finished goods and services. But there's more than a hint of trouble in this report which could suggest that inflation may become a rising risk for the economic outlook and for Federal Reserve policy.
The consumer price index increased 0.4 percent in March boosted by a 1.3 percent hike in energy prices. Excluding food and energy, the CPI rose 0.3 percent for the month, with higher prices in apparel and recreation. Crude oil prices were up in April and the EIA has been reporting higher average gasoline pump prices over the course of the month.
CPI Consensus Forecast for Apr 06: 0.6 percent
Range: 0.5 to 0.7 percent
CPI ex food & energy Consensus Forecast for Apr 06: 0.2 percent
Range: 0.2 to 0.3 percent
![[Chart]](chart.gif)
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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. |
![[Chart]](chart_1.gif)
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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. |
| 2006 Release Schedule | ||||||||||||||||||||||||||
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