2017 Economic Calendar
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Released On 4/14/2017 8:30:00 AM For Mar, 2017
PriorConsensusConsensus RangeActual
CPI - M/M change0.1 %0.0 %-0.1 % to 0.2 %-0.3 %
CPI - Y/Y change2.7 %2.6 %2.6 % to 2.8 %2.4 %
CPI less food & energy- M/M change0.2 %0.2 %0.1 % to 0.3 %-0.1 %
CPI less food & energy - Y/Y change2.2 %2.3 %2.2 % to 2.4 %2.0 %

Yesterday's producer price report set up the disappointment for today's report on consumer prices where the headline fell a very sharp and unexpected 0.3 percent in March. The core rate (less food & energy) fell 0.1 percent which is also unexpected.

Energy prices fell 3.2 percent in the month with gasoline down 6.2 percent. But excluding just energy, prices are still in the negative column, at minus 0.1 percent.

A special negative in the March report is communications which fell a very steep 3.5 percent and reflects cell phone plans which subtracted 1 tenth from both the headline rate and core. Yet other categories are also weak including apparel, down 0.7 percent, and transportation where prices, due to weakness for vehicles, fell 1.4 percent. Housing and medical, two centers of price traction, managed only 0.1 percent gains.

Year-on-year rates also moved lower, to 2.4 percent overall for a sharp 3 tenths decline and to 2.0 percent for the core which is 2 tenths lower. An increase for this closely watched core rate was expected.

The lack of price traction ultimately points to softness in overall demand for consumer goods and services. And though demand in the labor market is very strong, wage improvement has been only marginal. A report like this points to the need for steady monetary stimulus and will push back expectations for Federal Reserve rate hikes.

Consensus Outlook
A 2 tenths jump in February's year-on-year consumer price index to 2.7 percent foretold a similar jump in the Federal Reserve's PCE price target, with both at 5-year highs. But when excluding food and importantly energy, the core rate for both the CPI and PCE have been steady and below target and ultimately reflect lack of wage pressure for labor. Forecasters expect the consumer price index to remain unchanged in March with the year-on-year rate slowing 1 tenth to 2.6 percent. When excluding food & energy, a 0.2 percent monthly gain is expected while the call for the yearly rate is 2.3 percent vs February's 2.2 percent.

The Consumer Price Index is a measure of the change in the average price level of a fixed basket of goods and services purchased by consumers. Monthly changes in the CPI represent the rate of inflation for the consumer. Annual inflation is also closely watched.

The consumer price index is available nationally by expenditure category and by commodity and service group for all urban consumers (CPI-U) and wage earners (CPI-W). All urban consumers are a more inclusive group, representing about 87 percent of the population. The CPI-U is the more widely quoted of the two, although cost-of-living contracts for unions and Social Security benefits are usually tied to the CPI-W, because it has a longer history. Monthly variations between the two are slight.

The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas. The regional and city CPIs are often used in local contracts.

The Bureau of Labor Statistics also produces a chain-weighted index called the Chained CPI. This measures a variable basket of goods and services whereas the regular CPI-U and CPI-W measure a fixed basket of goods and services. The Chained CPI is similar to the personal consumption expenditure price index that is closely monitored by the Federal Reserve Board.  Why Investors Care
It is always a good idea to look at more than a few months of data to get a sense of changes in established trends. Monthly changes in the CPI are mainly volatile because of sharp fluctuations in food and energy prices. The core CPI eliminates the sharper fluctuations.
Data Source: Haver Analytics
Yearly changes tend to smooth out more severe monthly fluctuations and give a better idea of the underlying rate of inflation. Even with the smoother trend, note that the core CPI does not fluctuate as much as the total CPI.
Data Source: Haver Analytics

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