CPI Rises 0.2% in May, Gas Drops for First Time in 11 Months

- CPI Rises 0.2% in May, Gas Drops for First Time in 11 Months



Jun 15, 2011

The Consumer Price Index (CPI) increased a seasonally adjusted 0.2% in May, the Bureau of Labor Statistics reported today, showing prices moderating somewhat from the 0.4% increase in April.

Economists had expected a 0.1% increase. The index has now increased 3.6% over the last twelve months.

The core CPI, which excludes food and fuel actually increased at a faster rate in the month, rising 0.3%. Economists had been expecting a 0.2% rise.

That's the largest increase in the core rate since July of 2008. Apparel, shelter, new vehicles, and recreation all contributed to the increase, more than offsetting declines in the prices for airline fares, tobacco, and personal care.

The food index rose as well, with the food at home index gaining 0.5% for the second month in a row.

The energy index declined 1.0%, with gasoline falling 2% alone. It's the first decline in the gas index since June of 2010.

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S&P Launches Oil Hedged Index

S&P Launches Oil Hedged Index

Standard & Poor's

S&P Indices announced Wednesday the launch of the S&P 500 Oil Hedged Index, calculated as a combination of a long S&P 500 position overlaid with long positions in NYMEX Oil futures and ICE Brent Crude Oil futures.

The S&P 500 Oil Hedged Index seeks to reduce the effects of a rise in inflation, as reflected in higher oil prices, or against declines in the value of the U.S. Dollar by simulating the returns of an investment strategy that is long the S&P 500 and hedged against changes in the U.S. Dollar, as measured by oil prices. By holding long oil futures contracts, investors may benefit from an increase in oil prices or potentially sustain losses when the opposite occurs.

The Index uses NYMEX Crude Oil and ICE Brent Crude Oil futures as a hedge. The hedge position has 50% in NYMEX Crude Oil and 50% in ICE Brent Crude Oil at the close of each rebalancing day. The hedge only protects against adverse movements in the relative value of the U.S. Dollar, as expressed in the dollar price of oil. Stock market risk is not hedged in any way.

"Investors are increasingly looking for alternative methods to hedge against inflationary risk during this period of global economic uncertainty," says Alka Banerjee, Vice President at S&P Indices. "We would expect funds that replicate returns on the S&P 500 Oil Hedged Index to provide investors with a means to mitigate the potential negative impact on an investor's portfolio resulting from a rise in inflation or decline in the U.S. Dollar."

The S&P 500 Oil Hedged Index belongs to the S&P U.S. Index family. Other closely related S&P indices include British Pound, Canadian Dollar, Euro, Yen, and Gold hedged S&P 500 indices.

S&P Indices, a world leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1.25 trillion is directly indexed to Standard & Poor's family of indices, which includes the S&P 500, the world's most followed stock market index, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, the S&P Global BMI, an index with approximately 11,000 constituents, the S&P GSCI, the industry's most closely watched commodities index, and the S&P National AMT-Free Municipal Bond Index, the premier investable index for U.S. municipal bonds.

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CPI Increases 0.5% In March

CPI Increases 0.5% In March



Apr 15, 2011

The consumer-price index increased 0.5% in March, led by increases in food and fuel costs, according to the Labor Department. The report was in-line with what economists had expected.

Core CPI, which excludes volatile food and fuel prices, rose 0.1% in the month, less than the 0.2% economists had forecast.

The index has now increased 2.7% in the past 12 months, the biggest year-over-year increase since December of 2009. Core CPI has risen 1.2% in that time frame.

As recently as October, the year-over-year gain was just 0.6%, the smallest rate of price increase since records began in 1958.

Energy costs increased 3.5% from a month earlier, the most since December, while gasoline prices jumped 5.6%.

Rising prices have caused economists to lower their forecasts for inflation adjusted consumer spending, which increased at a 2% annual rate in Q1, compared to a 4% gain in the fourth quarter of 2010.

The Labor Department Reported Jobless Claims Rose 27,000 To 412,000, Wholesale Costs Up 0.7%

The Labor Department Reported Jobless Claims Rose 27,000 To 412,000, Wholesale Costs Up 0.7%



Apr 14, 2011

The Labor Department reported that applications for jobless benefits rose 27,000 in the week ended April 9 to 412,000. Economists had expected that claims would be little changed at 380,000, according to a Bloomberg News survey.

The labor market is showing signs of strengthening as payrolls increase, which could help to sustain gains in consumer spending.

The average of new claims over the past four weeks rose by 5,500 to 395,750. The Labor Department also reported that wholesale costs in the U.S. rose 0.7% in March, led by higher prices for energy, light trucks and passenger cars. Economists had expected a 1% gain on average for the producer price index.

The increase was smaller than forecast as food prices unexpectedly dropped. The core measure, excluding food and energy costs, rose 0.3%.

Credit Suisse Lowers U.S. GDP Forecasts for First Half 2011

Credit Suisse Lowers U.S. GDP Forecasts for First Half 2011



Credit Suisse has revised down its U.S. GDP forecasts for the first half of 2011. The firm now expects 2.5% real GDP growth in Q1, down from its previous forecast of 3.5%. Its Q2 forecast was also revised down to 3.3% from 3.7%. However, the firm's 2011 second half forecasts remain unaltered at 3.8% and 4.0% for Q3 and Q4, respectively. Credit Suisse expects full year 2011 growth of 3.4% on a year-over-year basis and 3% on an annual average basis. This is down from its previous estimate of 3.8% and 3.3%, respectively. The firm sees 4.0% real GDP growth in 2012.

Credit Suisse issued a statement saying: The first quarter's forecast revision is mostly due to current quarter accounting. The monthly building blocks that add up to GDP have consistently printed below expectations this quarter, defying the much rosier readings from other parallel evidence on the economy (such as the ISM surveys). The list of GDP "source data" disappointments includes home sales, housing starts, capital goods shipments, non-residential construction, federal spending, and a sharp increase in the trade deficit. Most importantly, the GDP's largest building block - consumer spending - is slowing sharply on a sequential basis, on track for less than 2% growth in Q1, compared to 4% growth in Q4. Our revision to second quarter growth is partly a consequence of higher oil prices and the negative effect on real income growth. Consumer confidence gauges also fell sharply in March, presumably due to higher gasoline prices. Another reason for our Q2 downgrade is housing, particularly the 22% plunge in February housing starts. Falling starts will impact future readings on construction outlays and the associated GDP component - residential investment.