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***Top stories from the last 15 days
- Written by Brad Zigler |
- April 15, 2009
Yearly CPI Falls; First Time In Over Five Decades
- Details
The Consumer Price Index (CPI) nudged up 0.2% in March, according to the U.S. Bureau of Labor Statistics (BLS), extending the year's uptrend to a three-month run. CPI ticked up 0.5% in February and 0.4% in January before seasonal adjustments.
Year-over-year, however, CPI fell 0.4%, the first 12-month decline since August 1955. The yearly decline was driven by falling energy prices, as BLS reported 12-month increases in every top-level category except transportation costs.
The so-called "core" CPI, which excludes volatile energy and food prices, increased 0.2% in March, matching increases posted in January and February.
Energy prices fell 3% in March, bucking a two-month uptrend. Fuel prices ran up 3.3% in February and 1.7% in January. Food prices slipped 0.1% for the second straight month in March, led by the food-at-home category, which dipped 0.4% to match February's decline.
HAI'S own Breakfast Index – a futures benchmark of eight common breakfast food items – fell 0.8% in the three-month period ending in March, mirroring the fall in producer prices reported by the BLS yesterday.
Food price declines slowed significantly, perhaps the first tentative indications of a bottom in the disinflation rate. The average breakfast food cost, reflected through futures, declined at an 8.4% rate through February.
HAI Breakfast Index - March
| Commodity | Contract Month | 02-Jan-09 Price | 31-Mar-09 Price | 3-Month Change | Annualized Change |
| Sugar #11 | May 09 | 12.11 /lb | 12.67/lb | 4.6% | 19.6% |
| Orange Juice | May 09 | 72.95 /lb | 76.30 /lb | 4.6% | 19.5% |
| Coffee | May 09 | 113.00 /lb | 115.75 /lb | 2.4% | 10.0% |
| Milk, Class III | April 09 | $11.14/cwt | $11.28/cwt | 1.3% | 5.1% |
| Cocoa | May 09 | $2,608/tonne | $2,605/tonne | -0.1% | -0.5% |
| Butter, AA | May 09 | 125.00 /lb | 123.00 /lb | -1.6% | -6.2% |
| Pork Bellies (Bacon) | May 09 | 89.000 /lb | 86.550 /lb | -2.8% | -10.5% |
| Wheat | May 09 | $6.2600/bu | $5.3275/bu | -14.9% | -47.3% |
| Average | -0.8% | -1.3% | |||
| bu = bushel; tonne = metric ton (2,200 lbs); cwt = hundredweight (100 lbs) | |||||
Four of the eight breakfast food futures tracked by the index rose in price through March. In February, only two commodities rose over the survey period.
Yesterday, we reported the Producer Price Index (PPI) for finished consumer foods dipped 0.7% last month on the heels of a 1.6% decline in February (see "PPI And Monetary Inflation Offer A Glimpse Of The Future"). At the crude production stage, farm prices for food slumped 1.9% in March. The previous month, farm prices fell 2.6%.
Typically, there's a three-month lag before changes in farm prices are reflected in finished food prices and further lags before changes ripple through the supply chain to affect consumer prices. At each stage, the degree of change usually moderates.
