**MNI 5 THINGS: US August CPI Below-Expected +0.2%,Core +0.1%>

--5 Things We Learned From The August CPI Data

By Kevin Kastner, Shikha Dave, and Harrison Clarke

     WASHINGTON (MNI) - The following are the key points from the 

Consumer Price Index data for August released by the Bureau of Labor 

Statistics Thursday: 

     - August CPI rose only 0.2% month/month overall, softer than the 

0.3% gain expected by analysts, but right on market expectations. Before 

rounding it was +0.223%, on the high side of 0.2%, but would have been 

lower without a surge in energy prices. Core prices also below 

expectations with a 0.1% gain and the year/year rates slowed, so the 

market reaction should be reflect a sigh of relief from inflation hawks. 

     - Further, core CPI was +0.082% unrounded, so on the low side of 

+0.1%, with the major components mixed. The large owners' equivalent 

rents category rose 0.3% and lodging away from home prices rose 0.6%, 

but prices of new vehicles were flat, apparel prices fell 1.6% and 

medical care prices fell 0.2%.  

     - The y/y rate for headline CPI slowed to 2.7% in August vs 2.9% in 

July, while the y/y rate for core CPI declined to 2.2% from 2.4%. 

Overall, the data suggest slight pause in inflation growth, but not 

enough to move the FOMC off its gradual rate hike path. 

     - As with the overall figure, the core CPI data are generally well 

forecasted in August, so today's data, while slightly overestimated, 

maintain that trend. The data suggest a downside risk for core PCE 

prices when they are released later in the month. 

     - Energy prices rebounded by 1.9% in August after a 0.5% decrease 

in July, with gasoline prices surging 3.0%, fuel oil prices up 2.2%, 

electricity prices up 0.3% and gas utilities prices up 0.9%. Energy 

prices were actually down 0.1% unadjusted, so seasonal adjustment 

factors were a sharp boost in late-summer. CPI excluding only energy was 

up 0.1%, while food prices ticked up 0.1%, in contrast to the 0.6% 

decline seen in PPI food prices in Wednesday's release. 

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

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