REPEAT: MNI ANALYSIS: US December CPI Rise 0.1%, Core Up 0.3%>

Repeats Story Initially Transmitted at 13:30 GMT Jan 12/08:30 EST Jan 12

--Overall CPI Slipped To +2.1% Y/Y, Core CPI Now +1.8% Y/Y Vs +1.7% Nov

--Retail Sales Up 0.4% In December, As Expected; Ex-MV Also +0.4%

By Kevin Kastner, Sara Haire and Holly Stokes

     WASHINGTON (MNI) - The CPI rose 0.1% in December, on analysts 

expectations, while headline retail sales were up 0.4%, also expected 

by analysts, data released Friday morning showed. 

     Even as both came in on target, some analysts and market 

participants saw stronger numbers for the reports, and will be 

disappointed. 

--CONSUMER PRICES ON EXPECTATIONS, CORE STRONGER

     The Consumer Price Index rose by 0.1% in December, as expected, 

while core CPI posted a stronger-than-expected 0.3% rise compared with 

the 0.2% gain expected, data released Friday by the Bureau of Labor 

Statistics showed. 

     Unrounded, the month/month rise for overall CPI was +0.1498%, very 

close to being rounded up to a 0.2% headline gain. The unrounded gain 

for core CPI was +0.2767%. While the December core CPI figure was above 

expectations, this is the first time the median estimate in MNI survey 

history had aimed too low for December core CPI, it was on the low side 

of 0.3%. 

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

the year/year rate remaining well below the 2% threshold, but it is 

creeping up closer to that point. 

     The year/year rate for overall CPI now stands at 2.1%, down from 

the 2.2% rate in November. For core CPI, the year/year rate bounced back 

up to 1.8% from 1.7% in November. 

     Within core CPI, owners equivalent rents rose 0.3% after a 0.2% 

rise in the previous month, while lodging away from home rebounded by 

0.8% after a 1.3% dip in the previous month. 

     Apparel prices were expected to rebound in the month, but instead 

fell further with a 0.5% decline after a 1.3% November drop, the fourth 

consecutive fall. 

     Energy prices fell by 1.2% in the month, with a 2.7% drop in 

gasoline prices more than offsetting a 3.0% jump in fuel oil prices. 

Excluding only energy prices, the December CPI would have been up 0.3%. 

     Food prices were up 0.2% in December, with food at home up 0.1%, 

and food away from home up 0.2%. 

--RETAIL SALES AS EXPECTED

     In other data released Friday, the value of retail sales rose 0.4% 

in December, as expected by analysts, and were up 0.4% excluding motor 

vehicle sales. There were upward revisions to sales in both October and 

November. 

     Excluding autos, gasoline, and building materials, "control" retail 

sales were up 0.4%. And for good measure, excluding food services as 

well as those three measures, retail sales were up 0.3%, suggesting 

underlying sales growth remained solid, though at a slower pace than in 

November. 

     December motor vehicle sales posted a 0.2% rebound after a 1.0% 

decline in the previous month, a smaller rise than some analysts had 

predicted when forecasting above the 0.4% median estimate. At the same 

time, building materials sales rose 1.2% in December, continuing their 

upward trend. 

     Gasoline store sales were flat in December following a 3.0% jump in 

November and food services and drinking places sales were up 0.7% after 

a 0.5% November gain. 

     The retail sales data suggest that fourth quarter consumption is 

well ahead of the third quarter average, a positive for fourth quarter 

PCE. 

     Incorporating the revisions to October and November, fourth quarter 

sales were up 11.3% at an annual rate, while sales excluding motor 

vehicles were up 10.6% from the third quarter. Sales excluding autos, 

gas and building materials were up 8.1% and sales also excluding food 

services were up 8.9%. 

     Total retail sales for 2017 were $5.756 trillion, up 4.2% from 

2016. Sales excluding motor vehicles were $4.570 trillion, up 4.3% from 

a year earlier. Both were well above their rates in 2016. 

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