CPI Mostly Unchanged for Second Month in a Row

The Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) held steady in July. Overall, the CPI-U has remained either unchanged or declined in each of the last four months. Energy prices slipped 0.3% in July, putting more downward pressure on topline CPI.  The next couple of months of readings on overall CPI will likely be stronger, however, as gasoline and natural gas prices have surged in recent weeks.

Core CPI, a measure that excludes volatile food and energy prices from the calculation, posted its smallest month-to-month increase since September 2011. Year-over-year growth in core CPI still points to a very tame rate of increase in non-food and non-energy price levels, with the latest reading of 2.1% the third consecutive month this metric has decelerated versus to its year-ago level.

The shelter index, which serves as a crude measure of overall housing costs, rose for the 28th consecutive month; however, each of those increases have been modest (including the 0.1% gain in June), leaving the shelter index only 2.1% above its year-ago level. In order to more closely assess trends in rental housing costs, NAHB constructs a real rent index from the CPI for rent of primary residences and overall CPI. This metric has registered four consecutive month-to-month increases, with the latest gain coming in at 3.3% on an annualized basis.



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