- The Consumer Price Index for August fell -.1% versus estimates of unch. and a .1% increase in July.
- The CPI Ex Food & Energy for August rose .2% versus estimates of a .2% gain and a .2% increase in July.
- Housing Starts for August fell to 1331K versus estimates of 1350K and a downwardly revised 1367K in July.
- Building Permits for August fell to 1307K versus estimates of 1348K and an upwardly revised 1389K in July.
BOTTOM LINE: Consumer prices in the US unexpectedly fell in August for the first time this year, as Americans paid less for gasoline and housing costs were unchanged, Bloomberg said. Gasoline prices fell 4.9% during the month. Clothing prices fell .5% following a .4% gain in July. Medical prices rose .5% versus a .6% increase in July. Auto prices rose just .1%. The Consumer Price Index is now rising at a 2.0% rate year-over-year versus the long-term average of 3.1% and 4.3% in June of last year. I continue to believe inflation has peaked for this cycle and that the long-term trend of disinflation remains firmly in tact.
Builders in the US began work on the fewest homes in 12 years in August, which should help reduce bloated inventories, Bloomberg reported. Residential construction is now down 19% over the last 12 months. The decrease in starts was led by a 38% drop in the Northeast and an 18% decline in the West. Construction increased 11% in the South and 4.2% in the Midwest. I continue to believe home construction will remain muted over the intermediate-term as homebuilders work down inventories.
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