Wednesday, September 16, 2009
The Labor Department reported that, after no change in July, rising energy costs drove overall consumer prices higher by 0.4 percent in August, exceeding analysts' expectations.
On a year-over-year basis, prices were 1.5 percent lower (unadjusted for seasonal variations), likely making the July reading of -2.1 percent the low for this cycle since annual energy price comparisons will soon be made against plunging oil prices seen in late-2008.
After dipping slightly in July, energy prices surged 4.6 percent in August, paced by a 9.1 percent increase in the cost of gasoline and a 6.2 percent gain for fuel oil.
The cost of new automobiles fell 1.3 percent, the biggest drop in 27 years, aided by the recently concluded "Cash for Clunkers" program that provided government rebates of between $3,500 and $4,500 to new car buyers.
Food prices rose 0.1 percent in August and are now up just 0.6 percent from a year ago while housing costs rose 0.1 percent last month and now sport a year-over-year decline of 0.6 percent, driven lower by plunging prices for household fuel.
In fact, the entire decline in housing costs is attributed to energy. Amazingly, the "shelter" subcategory shows a gain of 0.9 percent from a year ago, almost entirely due to an increase of about 2 percent from year-ago levels for the combined rent/owners' equivalent rent groups.
Sometimes you have to wonder whether consumer prices bear any resemblance to the real world. In the case of rent and owners' equivalent rent (the Labor Department's dubious proxy for home ownership costs), they certainly do not.