Curious September Energy Decline in CPI, With Crude and Gas Futures Rising

Earlier today the BLS reported a 0.5% surge in import prices that was fuel-related.

The import price for fuel increased 3.8% despite the strong dollar.

For details, please see Import Prices Jump 0.5% Led by Fuel, Export Prices Flat but Ag Prices Down 1.4%.

Charts also show a rise in the price of Crude in September.

Yesterday, the BLS said energy prices fell in September.

Inquiring minds are diving into the BLS CPI Report for September to investigate the discrepancy.

CPI Month-Over-Month

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• The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in September on a seasonally adjusted basis after rising 0.2 percent in August.
• The shelter index continued to rise and accounted for over half of the seasonally adjusted monthly increase in the all items index.
• The energy index declined 0.5 percent in September after rising in August.
• The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index.
• The index for all items less food and energy rose 0.1 percent in September, the same increase as in August. The shelter index increased 0.2 percent, and the indexes for apparel, motor vehicle insurance, recreation, and airline fares also rose. The medical care index increased as well, though its components were mixed.
• The index for used cars and trucks, which fell sharply, and the new vehicles index were among the indexes that declined in September.

CPI Year-Over-Year

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• The all items index rose 2.3 percent for the 12 months ending September, a smaller increase than the 2.7 percent increase for the 12 months ending August.
• The energy index rose 4.8 percent over the last year, a notably smaller increase than the 10.2-percent increase for the 12 month period ending August.
• The index for all items less food and energy rose 2.2 percent for the 12 months ending September and the food index increased 1.4 percent; these were both the same rate of increase as for the 12 months ending August.

The BLS says gasoline prices dropped 0.2% in September although the price of crude rose as did gasoline futures throughout the month.

Gasoline Futures

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On September 1, gasoline futures were 1.9997. On September 30 the futures closed at 2.1275.

This is somewhat curious, but let’s look ahead.

Looking Ahead by Looking Back

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Looking ahead, if the price of crude tanks, we may see some below 2.0% year-over-year increases in the CPI.

But negative year-over-year prices will take a substantial decline in the price of crude.

Mike “Mish” Shedlock