ANALYSIS: US August CPI +0.4%, Core +0.2%; Claims -14k>

--Owners Equivalent Rent +0.3%, Lodging Away From Home +4.4%

--September 9 Week Claims Fall To 284,000; Irma States Estimated

By Kevin Kastner, Sara Haire and Holly Stokes

     WASHINGTON (MNI) - The Consumer Price Index rose 0.4% in August, 

slightly ahead of expectations for a 0.3% gain due to a sharp rise in 

gasoline prices, while core CPI posted an as-expected 0.2% rise, but was 

close to being rounded up to +0.3%, data released Thursday by the Bureau 

of Labor Statistics showed. 

     Released at the same time, initial jobless claims fell by 14,000 

to 284,000 in the September 9 week, a surprise decline that suggests 

workers are having trouble filing for benefits. Unadjusted filings in 

Texas fell by 11,800 after rising by 51,683 in the previous week, but is 

likely to rebound as offices open. There was no impact from Hurricane 

Irma on Florida claims this week, but claims were estimated by Florida, 

Georgia, South Carolina, and the Virgin Islands this week, as the storm 

made it hard to tally and report the data.

     Within core CPI, owners equivalent rents rose 0.3%, while the 

lodging away from home category rose 4.4% after a record 4.2% plunge in 

July. Prices of new vehicles were flat, and used vehicles prices were 

down 0.2%, but apparel prices rose 0.1%. 

     Food prices were up 0.1% in August, with food at home down and food 

away from home up. Total CPI excluding just food prices would have been 

up 0.5% 

     Energy prices jumped 2.8% in the month, with a 6.3% surge in 

gasoline prices and a 2.9% rise in fuel oil prices. Excluding only 

energy prices, the August CPI would have been up 0.2%. Energy prices 

are likely to rise sharply in the coming months due to supply shortages 

from the hurricane-impacted regions. Higher gasoline pump prices have 

already been seen in September. 

     The year/year rate for overall CPI now stands at 1.9%, up from the 

1.7% rate in July. For core CPI, the year/year rate remained at 1.7%. 

Unrounded, the month/month rise for core CPI was +0.248%, close to being 

rounded up to 0.3%. 

     Overall, the data points to contained core consumer inflation, with 

the year/year rate remaining well below the 2% threshold, allowing the 

FOMC to maintain a very slow pace of policy tightening in the face of 

negative factors such as the hurricanes. 

     The four-week moving average for initial claims, a better measure 

of the underlying trend of the data, rose by 13,000 to 263,250 in the 

September 9 week. The four-week average will continue this upward trend 

as the headline number rises. Even if the number of headline claims does 

not change next week, a very unlikely scenario, and there are no 

revisions to data from the past four weeks, the four-week average will 

rise by 12,250 as the 235,000 level in the August 19 week rolls out of 

the calculation. 

     Seasonal adjustment factors had expected a decrease of 10.5%, or 

26,224, in unadjusted claims in the holiday-shortened week. Instead, 

unadjusted claims fell by 36,500 to 214,121. The current week's level 

was still ahead of the 193,291 level in the comparable week a year ago 

due to the hurricanes. 

     The level of continuing claims fell by 7,000 to 1.944 million in 

the September 2 week, not yet reflecting the increase in initial claims 

as some offices remained closed. However, continuing claims would be 

expected to rise in the coming weeks as many displaced workers will 

be on this assistance for quite some time. The addition of claims from 

Florida and other areas affected by Hurricane Irma will only add to this 

total. 

     The seasonally adjusted insured unemployment rate held steady at 

1.4% in the September 2 week for the 22nd straight week. The current 

week's rate is down from 1.6% in the same week a year earlier. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,MT$$$$,M$U$$$,MAUDR$]