Dollar keeps soft footing after US CPI matches estimates

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The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent 
in December on a seasonally adjusted basis after being unchanged in November, 
the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, 
the all items index increased 1.9 percent before seasonal adjustment.

The seasonally adjusted decline in the all items index was caused by a sharp
decrease in the gasoline index, which fell 7.5 percent in December. This
decline more than offset increases in several indexes including shelter, food,
and other energy components. The energy index fell 3.5 percent, as the gasoline
and fuel oil indexes fell, but the indexes for natural gas and for electricity
increased. The food index increased 0.4 percent in December.

The index for all items less food and energy increased 0.2 percent in December,
the same increase as in October and November. Along with the index for shelter,
the indexes for recreation, medical care, and household furnishings and
operations all increased in December, while the indexes for airline fares, used
cars and trucks, and motor vehicle insurance all declined. 

The all items index increased 1.9 percent for the 12 months ending December;
this was the first time the 12-month change has been under 2.0 percent since
August 2017. The index for all items less food and energy rose 2.2 percent over
the last 12 months, the same increase as for the 12 months ending November. The
food index rose 1.6 percent over the past year, while the energy index declined
0.3 percent. 

Food

The food index rose 0.4 percent in December, the largest increase since May
2014. The food at home index rose 0.3 percent, as the index for fruits and
vegetables increased 1.7 percent. The index for fresh fruits rose 1.3 percent
and the fresh vegetables index increased 2.6 percent.  

The index for cereals and bakery products advanced 0.4 percent, and the indexes
for dairy and related products and for nonalcoholic beverages both increased
0.3 percent. The index for meats, poultry, fish, and eggs was unchanged, while
the only major grocery store food group index to decline was other food at home,
which fell 0.3 percent. The index for food away from home rose 0.4 percent,
with the indexes for both full service meals and limited service meals
increasing.

The index for food at home rose 0.6 percent over the past year, with four of the
six major grocery store food groups increasing over the span. The food away
from home index increased 2.8 percent over the past 12 months. 

Energy

The energy index fell 3.5 percent in December following a 2.2-percent decline
in November. The gasoline index fell 7.5 percent in December after a 4.2-percent
decline the prior month. (Before seasonal adjustment, gasoline prices fell 9.9
percent in December.) The fuel oil index also declined sharply in December,
falling 11.4 percent. However, the other major energy component indexes rose
in December, with the index for natural gas increasing 5.6 percent and the
electricity index rising 0.7 percent.

The energy index fell 0.3 percent over the past 12 months; this represented the
first 12-month decline in the energy index since the period ending September
2016. The gasoline index declined 2.1 percent over the last year, more than
offsetting increases in the other component indexes. The electricity index rose
1.1 percent, the index for natural gas increased 2.3 percent, and the fuel oil
index advanced 1.9 percent. 
  
 
All items less food and energy

The index for all items less food and energy increased 0.2 percent in December.
The shelter index increased 0.3 percent in December, the same increase as the
prior month. The indexes for rent and owners' equivalent rent both increased 0.2
percent, while the index for lodging away from home rose 2.7 percent. 

The recreation index rose in December, increasing 0.6 percent. The medical care
index rose 0.3 percent in December with its major component indexes mixed. The
index for hospital services rose 0.5 percent, the physicians' services index was
unchanged, and the index for prescription drugs declined 0.4 percent. The index
for household furnishings and operations rose 0.3 percent in December, and the
education index rose 0.2 percent.

The index for airline fares fell 1.5 percent in December following a 2.4-percent
decline in November. The index for used cars and trucks fell 0.2 percent after
rising in October and November. The motor vehicle insurance index fell 0.2
percent, its second consecutive decline. Several indexes were unchanged in
December, including those for new vehicles, apparel, and communication.      

The index for all items less food and energy rose 2.2 percent over the past 12
months, the same increase for the period ending November. The shelter index
increased 3.2 percent over the last year, and the medical care index rose 2.0
percent.  

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.9 percent
over the last 12 months to an index level of 251.233 (1982-84=100). For the
month, the index decreased 0.3 percent prior to seasonal adjustment.  

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)
increased 1.8 percent over the last 12 months to an index level of 244.786
(1982-84=100). For the month, the index decreased 0.5 percent prior to seasonal
adjustment.  

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased
1.8 percent over the last 12 months. For the month, the index declined 0.3
percent on a not seasonally adjusted basis. Please note that the indexes for
the past 10 to 12 months are subject to revision. 

Year in Review (December to December)

The all items CPI rose 1.9 percent in 2018, a smaller increase than the 2.1
percent increase in 2016 and 2017, but larger than the increases in any of the
years from 2012 to 2015. It was also slightly larger than the 1.8-percent
average annual increase over the past 10 years. 

The food index increased 1.6 percent in 2018, the same increase as in 2017. The
index for food at home increased 0.6 percent in 2018 following a 0.9-percent
increase in 2017.   

Four of the six major grocery store food group indexes increased in 2018. The
index for cereals and bakery products increased the most, rising 1.7 percent
after declining in 2016 and 2017. The fruits and vegetables index, which rose
1.5 percent in 2017, increased 1.6 percent in 2018. The index for nonalcoholic
beverages increased 1.4 percent in 2018 after being unchanged in 2017. The
index for other food at home also increased in 2018, rising 0.2 percent after
advancing 0.5 percent the prior year.  

In contrast, the index for meats, poultry, fish, and eggs declined in 2018,
falling 0.4 percent after rising 2.8 percent in 2017. The dairy and related
products index fell slightly in 2018, decreasing 0.1 percent, the fourth yearly
decline in a row.  

The index for food away from home rose 2.8 percent in 2018 after a 2.5-percent
increase the prior year. Over the last 10 years, the food index rose at an
average annual rate of 1.6 percent. The food at home index rose at a 0.9-percent
rate, and the index for food away from home increased at a 2.4-percent rate
since December 2008. 

The energy index fell slightly in 2018, declining 0.3 percent after rising 6.9
percent in 2017. The gasoline index fell 2.1 percent in 2018 after rising in
2016 and 2017. The decline in the gasoline index more than offset increases in
other energy component indexes. The index for electricity increased 1.1 percent
in 2018 after rising 2.6 percent the prior year. The index for natural gas rose
for the third consecutive year, increasing 2.3 percent. The fuel oil index rose
1.9 percent in 2018. The energy index increased at a 1.9-percent average annual
rate over the past 10 years.    

The index for all items less food and energy rose 2.2 percent in 2018, a larger
increase than its 1.8-percent rise in 2017 and 1.8-percent average annual
increase over the past 10 years. The shelter index rose 3.2 percent in 2018,
the same increase as in 2017. The rent index rose 3.5 percent in 2018, while
the index for owners' equivalent rent increased 3.2 percent. The index for
household furnishings and operations increased 2.1 percent after falling in
each of the prior 5 years.  

The medical care index rose 2.0 percent in 2018, a slightly larger increase
than its 1.8-percent increase the prior year. The index for hospital services
rose 3.7 percent, while the physicians' services index increased 0.6 percent.
The index for prescription drugs, however, fell 0.6 percent in 2018. 

The index for motor vehicle insurance rose 4.6 percent in 2018 following larger
increases in recent years. The index for new vehicles fell for the second year
in a row, decreasing 0.3 percent after a 0.5-percent decline in 2017. The index
for used cars and trucks rose 1.4 percent in 2018 after decreasing in each of
the prior 2 years. 
 
The education index increased 2.6 percent in 2018 after a 2.0-percent rise in
2017. The index for communication declined 1.8 percent in 2018, its ninth
consecutive yearly decline. The recreation index rose 1.2 percent, and the
index for personal care increased 1.8 percent. The index for tobacco increased
3.4 percent, and the alcoholic beverages index rose 1.8 percent. 

The index for airline fares decreased for the sixth year in a row in 2018,
falling 2.6 percent. The apparel index declined for the fifth consecutive year,
though it decreased only 0.1 percent in 2018. 



BLS

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA

With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏

Ed Moya

Ed Moya

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