US AIRLINE FARES, TOBACCO ARE HALF CPI CORE INCREASE
--Energy Price Hikes Account for 'Nearly Half' of Overall 0.3% July Rise
By Denny Gulino
WASHINGTON (MktNews) - The July Consumer Price Index exactly met expectations with its 0.3% increase, "nearly half" of which was energy related, while the 0.2% core rate rise was half contributed by two components, airline fares and cigarette prices, the Labor Department reported Tuesday morning.
August has already seen a cut in airline fares, pointing to less pressure from that source in the next CPI report. The overall gain of 0.3% was reached even with a 0.9% decline in apparel prices, the third monthly decline in a row.
The major category of recreation prices was a flat zero for the second month.
Year to date, the CPI is running at a 2.4% annual rate, somewhat higher than where it finished last year, at 1.6%, entirely due to energy increases, the Bureau of Labor Statistics said.
The core rate is running under last year, with a seven-month annualized rate of 1.7%, compared to the 2.7% rate for all of last year.
Energy costs were responsible for "nearly half of the increase" from July and "two thirds of the acceleration" from June's zero for the CPI overall, BLS senior analyst Patrick Jackman told Market News International as the report was being made public.
"The acceleration in the core, obviously not influenced by energy, was due to two factors," he continued. "One was a really big jump in airline fares" which were up 6.5%. "The other was tobacco," helped up by an additional 30 cent tax imposed during the month in Maryland.
"The big story in tobacco continues to be marketing aspects, where some of major brands were heavily discounted, then they took discounts off," he said.
The year-to-date increase in the core rate he described as "very benign."
Expectations in a Market News International survey of economists had centered on an increase overall of 0.3% in the July Consumer Price Index, and a rise of 0.2% in the core rate.
Other major July CPI categories were food and beverages, up 0.2%; housing, up 0.1%; transportation, up 1.2%; and medical care, up 0.3%.
Housing Price Inflation doesn't match CPI
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