While overall consumer prices remained stable in North Texas and nationwide as of September, it’s costing more to spread butter on your toast, eat a nice steak and rent an apartment.
Consumer prices in the Dallas-Fort Worth area dipped 0.1 percent in August and September, after showing no change in the previous two-month period, according to data released today by the U.S. Bureau of Labor Statistics.
The U.S. Consumer Price Index edged up 0.1 percent due largely to high food prices. The national information is more detailed by product category.
Longer term, prices have risen. The CPI rose 1.1 percent in D-FW and up 1.7 percent nationally over the last 12 months.
Let’s look at some of the major forces at play in consumer prices in the short term and long term.
Energy: The latest energy prices remained low. The D-FW energy index fell 3.8 percent, driven by a 7.6-percent decline in gasoline costs and a 7.4-percent drop in motor fuel. Electricity costs rose 1.1 percent. Nationally, the energy index fell 0.7 percent as prices for gasoline, electricity and fuel oil all fell.
Over the last 12 months, energy prices rose 1.9 percent in D-FW as prices for household natural gas climbed 15 percent and household electricity increased 6 percent (gasoline costs fell 2 percent). Nationally, energy prices fell 0.6 percent over the last 12 months, with declines in every category except for propane and kerosene, and energy services.
Last week, the average price of a gallon of regular unleaded gas in Texas was $2.99, or 10 cents less than a week ago, according to the AAA Texas. Nationally, the average price of gas also has dropped but Texans are paying 17 cents less than the national average of $3.16.
“The rule of thumb is that every penny dip in gasoline prices puts an extra $1 billion in the hands of U.S. consumers over the course of a year,” according to Robert A. Dye, chief economist for Dallas-based Comerica Bank. “Some of those pennies will go to saving, some to paying down debt, but the bulk of it will go to purchasing more stuff.”
Food: Food prices continued to rise. D-FW food prices rose 1.4 percent, with groceries up the most (+2.2 percent). Food prices away from home for restaurants and such rose 0.4 percent, the first price movement in the index since January. That was higher than the national 0.7 percent increase in food prices.
Over the last 12 months, D-FW food prices rose 2.7 percent, with grocery costs up 3.5 percent and prices at restaurants and bars up 1.5 percent. Nationally, U.S. meat prices have risen 13 percent in the last 12 months, with beef and veal prices up nearly 18 percent and pork prices up 11.4 percent. U.S. butter prices have risen nearly 24 percent in the last year.
Clothing: Clothing prices, especially for women, rose 7.2 percent in D-FW — the highest increase of any major category tracked by the BLS for the region. Nationally, clothing prices rose 3.7 percent.
Over the last 12 months, clothing prices were relatively flat in North Texas and nationally.
Other: Higher prices also were seen in D-FW for apartment rental rates, and education and communication. D-FW transportation costs fell 2.7 percent and the cost of household furnishings and operations dropped 2.2 percent.
Over the last 12 months, the D-FW area saw higher prices apartment rental rates (4.7 percent) and medical care (+1.9 percent). The cost of household furnishings and operations fell 4.3 percent and the cost of transportation was down 2.8 percent.
Nationally, consumers paid more for all types of services — from hotels and home insurance to lawn care and medical care — in the last 12 months. Some of the biggest price increases were for women’s outerwear (+11 percent), children’s footwear (+7.8 percent), lodgings away from home (+5 percent) and prescription drugs (+3.8 percent). Some of the biggest price declines were for televisions (-4 percent), toys (-6 percent), personal computers (-8 percent), and laundry appliances (-6.8 percent).
So, what does all this mean for the economy?
The U.S. inflation rate, which is based on the CPI, was 1.7 percent as of September — below the Federal Reserve’s target rate of 2 percent.
That has rekindled “worries of deflation,” Wells Fargo economists Sam Bullard and Sarah Watt House wrote today in a research note.
Inflation — as well as job growth, the unemployment rate and other economic indicators — will factor into the Fed’s policy setting committee meeting next week.
Some economists today noted that softer inflation makes it less likely the Fed will start increasing interest rates before June 2015. Comerica’s Dye still expects the Fed next week to announce the planned ending of its asset purchase program.