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Initial Dollar Pop Faded Immediately

--Owners Equivalent Rent +0.2%; Medical Care Index +0.7% 
--Energy Prices Down -1.9% Following 1.3% Gain in August
By Brooke Migdon
     WASHINGTON (MNI) - The August CPI data were a tad stronger than 
expected though energy prices were a drag on headline inflation, data 
released Thursday by the Bureau of Labor Statistics showed. 
     Overall CPI slowed to a 0.1% gain, in line with market 
expectations. Core prices rose 0.3%, coming in above a market median 
which had called for a 0.2% increase. Year/year core prices rose to 2.4% 
following a 2.2% reading in July, the highest since July 2018. 
     The year/year rate slowed moderately to 1.7% from the 1.8% gain 
posted in July. Excluding only energy, the year/year rate was 2.3%, 
reflecting weakness in August energy prices. 
     Here are some of the key takeaways from the data released Thursday: 
     - The core CPI reading was 0.256% unrounded, on the low end 
of a 0.3% reading. 
     - The major core components saw widespread increases. The medical 
care index rose 0.7% and was the largest contributor to the August 
increase in core CPI. The large owners' equivalent rent category 
increased 0.2%, bringing the year/year rate up to 3.3%. Recreation 
prices rose for the first time in two months, climbing 0.5% after a flat 
reading in July. Used vehicle also prices jumped 1.1%. New vehicle 
prices, however, declined for a second consecutive month by -0.1%.  
     - Energy prices plummeted by 1.9% in August following a 1.3% 
increase in July. Gasoline prices lead the decline, falling 3.5%, as 
expected based on negative data from the August AAA and PPI reports. 
Electricity prices also fell, decreasing by 0.3%, but gas utilities 
prices bounced back from a disappointing July, increasing by 0.1% after 
a 1.8% decline. Excluding only energy, CPI was up 0.2%. 
     - Food prices posted a third consecutive flat reading in August, 
with the declining costs of fresh produce, meats and eggs offsetting a 
large increase in dairy prices. Excluding only food, CPI would still 
have been up 0.1%. 
     - Apparel prices slowed by 0.2% in August, but incoming China 
tariffs now target U.S. consumer goods, threatening to should push up 
costs in the near future.                                                                                  
     ** MNI Washington Bureau: 202-371-2121 **