Magazine article Economic Trends

Inflation and Prices

Magazine article Economic Trends

Inflation and Prices

Article excerpt

The Consumer Price Index (CPI) rose at an annualized rate of 4.5% in February, after a slight (0.6%) rise in January. The Bureau of Labor Statistics attributed virtually all of the monthly acceleration in the CPI growth rate to an annualized 26.8% rise in energy prices. However, the core CPI, which excludes the volatile food and energy prices, rose at a brisk 3.1% (annualized rate), exceeding the 2.2% average monthly growth rate of the previous 12 months. The median CPI, which attempts to control for volatile monthly price changes by considering the center of the monthly price-change distribution, increased 2.7%.

The 12-month inflation rates of the core CPI and median CPI continued to inch up in February; both these retail price measures reached 2.4%. Since late 2003, the core CPI's 12-month growth rate rose about 1.2 percentage points, while the median CPI's 12-month growth rate increased a modest 0.5 percentage point. The 16% trimmed-mean CPI's 12-month growth rate ticked down to 2.2%; this growth rate has fluctuated between 2.0% and 2.3% for almost a year. The Personal Consumption Expenditure (PCE) price index and the core PCE price index, which measure an alternate consumer market basket, largely mirror the CPI price measures. Core PCE price-index-measured inflation has fluctuated between 1.4% and 1.6% for the past year.

Energy price increases continued at a dramatic pace in February, although they have decelerated over the past four months on a year-to-year basis. Retail energy prices have risen almost 13.0% (as measured by the CPI Energy Index) since the beginning of 2004. Moreover, with the cost of crude oil continuing to rise at an alarming pace (recently reaching more than $57.00 a barrel for West Texas intermediate crude, an increase of over 35.0% since the beginning of this year), some reignition of retail energy prices now seems a virtual certainty. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.