Consumer Price Index Jumps to 7.9 Percent, Another New Four-Decades High

March 10, 2022

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5:09 pm

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53 comments

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Economics

Consumer Price Index data from BLS chart by Mish

Year-Over-Year CPI Details

The all items CPI index rose 7.9 percent for the 12 months ending February.
The 12-month increase has been steadily rising and is now the largest since the period ending January 1982.
The all items less food and energy index rose 6.4 percent, the largest 12-month change since the period ending August 1982.
The energy index rose 25.6 percent over the last year
The food index increased 7.9 percent, the largest 12-month increase since the period ending July 1981.
Rent increased 4.2% and Owners’ Equivalent Rent OER rose 4.3%

OER is the mythical price one would pay to rent one’s own house from oneself, unfurnished and without utilities.

OER is the single largest component in the CP with a weight of 24.15%. Rent has a weight of 7.37%. Given that both are continually understated vs other measures of rent, the CPI is up more than stated.

I do not chart energy prices because at 25.6%. it skews the scale of everything else.

CPI Year-Over-Year Percent Change Long Term

CPI Month Over Month

The gasoline index rose 6.6 percent in February and accounted for almost a third of the all items monthly increase
The food index rose 1.0 percent as the food at home index rose 1.4 percent; both were the largest monthly increases since April 2020.
The index for all items less food and energy rose 0.5 percent in February following a 0.6-percent increase the prior month.
The shelter index was by far the biggest factor in the increase, with a broad set of indexes also contributing, including those for recreation, household furnishings and operations, motor vehicle insurance, personal care, and airline fares.

I do not plot energy because it grossly distorts the left axis.

Bond Yields are up across the board on the news and the stock market is sinking once again.

In case no one noticed, the allegedly “data dependent” Fed ignored raging inflation for well over a year, even by their own pathetic measures that ignore housing and stock market bubbles.

This post originated on MishTalk.Com.

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Bhakta

3 years ago

And the media never calls out The FED which alone is the enabler of this. What is the goal of all the central banks? To own and control everything everywhere? Make us all live in SALVELANDIA as their debt slaves? They produce NOTHING except debt, and somehow most of the 7.5 billion fools on this planet dressed in human costume are chasing their debt. WHY?

Jackula

3 years ago

I think the current administration skipped Econ 101. The proposed $300 month gasoline credit/voucher scheme will add to the already out of control inflation.

conservativeprof

3 years ago

Reply to Jackula

Correct. The price of gasoline increases because of reduced supply. If consumers are given extra money to cover higher prices, gas prices will just continue to increase because demand has not decreased. Oil consumption will fall unless supply increases regardless of government action.

FromBrussels

3 years ago

….a pity western central banks can t print oil or gas , gold and other metals, wheat and fertilzer etc …..Russia doesn t have to print it …THEY GOT IT ALL ! That s probably we deluded brainwashed westerners, US in particular, are so fn mad at Russia, it is in fact the ONLY reason ….and the fact that it is a military super power of course …. Checkmate USA ? Or do you want to destroy the whole world to save your ugly warmonger’s face ? ….Btw don t stop the printing press now, send billions or even trillions to your far away Nazi nest, where you have military labs with WMD potential…..which reminds me, who had WMD again justifying the destruction of a whole country with hundreds of thousands of mostly innocent victims ?? Of course the US and justifying criminal acts are the ultimate contradictio explicita …. unlike Russia bombing a otherwise empty hospital filled with soldiers ….I hope they got them ALL !

Christoball

3 years ago

Reply to FromBrussels

It has been said that Government will become nothing more than a “Public Worker Pension and Health Benefits Plan” with a Police State and War Machine attached to it.

Naphtali

3 years ago

Reply to Christoball

Perhaps the police state will be a bit hampered by an armed citizenry rather than an unruly consumer base. (The Ukrainians may demonstrate the power of an angry armed populace against a modern War Machine.) Hmmm. The oligarchs and public servants here had better step up their gun control program.

BowserB46

3 years ago

I was a young adult in the 1970-80 stagflation. What’s different now from 1970? For one thing, the baby boom generation was entering the workforce, just as Medicare was created and Medicare tax separated from SS, so both of those programs were being made flush with cash. Now, the baby boom generation is retiring and taking money out of Social Security and Medicare. In the 40-50 years since we starting dumping our tax money into Social Security, the congress has been robbing that program for other things, plus expanding Social Security eligibility to more “disabled” and even to illegal aliens who moved back to Mexico and claimed work credits (“W” Bush opened the Social Security office in Mexico City for their convenience.)

Also instead of the baby boom generation and the mass of young professionals paying taxes, we have millions of low and minimum wage workers paying little or no taxes or getting the stealth welfare plan called “Earned Income Credit.” IRS paying out instead of receiving cash. And of course, we start this round of inflation with 30 trillion in debt and a congress wanting to spend another three trillion.

AND, as I recall bank reserve requirement in 1970 was around 12%, maybe 15%. Now it’s essential zero making the deposit multiplier virtually infinite, so the money supply is totally out of control, and a thousand dollar deposit could create, in theory at least, a billion dollars in the money supply–or more, with aggressive lending by banks. And that may be why the inflation rate has jumped so much faster than it did in the 1970’s.

Finally the psychology of inflation has been supplemented by the psychology of short supply. Buy now because it will cost more tomorrow. Buy now because it may not be available tomorrow. I remember the ’70’s. My supermarket sells potassium chloride water softener pellets. 40 lbs was $24. Then it went to $26. Then it was out of stock for a couple weeks. Yesterday it was back for $27, and there were five bags. I bought them all. Price and availability–two concerns and I’ve turned into part of the problem.

Christoball

3 years ago

Reply to BowserB46

That was you who grabbed those last bags. I was going to get them on the way out.

Naphtali

3 years ago

Reply to BowserB46

De-industrialization and financialization look to have been rather poor choices these days.

ohno

3 years ago

I’ve noticed huge price increases at major convenience stores. Not nearly in proportion to regular grocery stores. I picked up a cherry turnover at a major chain late at night with tax it was $4.11. I said never mind and walked out. Next day at the store same one was $1.25. I guess if people can’t walk anymore it’s a good business model. I’m not much into those $1.50 slices of crappy American cheese they like to upgrade your sandwich to either especially if they don’t even ask. Today I got a huge top sirloin enough for both of us for $12 and a 4 pack of pork steaks for $6 at the local rural store. You do have to know how to use that thing in the kitchen where all your pizza boxes are piled up on thoh. Suits me fine prices will stay lower for me.

Christoball

3 years ago

Reply to ohno

I always told my kids if you save $30 by shopping around for an hour, you made $30 an hour tax free for your time.

ohno

3 years ago

Reply to Christoball

“I’ll send you a tax form for that” warren.

Dean_70

3 years ago

I have a feeling it is all Russia’s fault. If not, maybe its all Trump’s fault. hahaha

Don’t look at the trillions dumped on the economy. Please look somewhere else! November elections will be brutal.

BowserB46

3 years ago

Reply to Dean_70

I hope you’re right, Dean. And you mean brutal for the Democrats. If not, and they maintain a majority in the House and God forbid get a majority in the Senate, we’re destined for an economy that will make the Great Depression look like the Good Old Days!

Dean_70

3 years ago

Reply to BowserB46

In July 2019 Jim Sinclair said there will be 2 resets coming. The first was to be severe but somewhat mild compared to the second major reset. Well, it looks like March 2020 qualified as the first when they went all in on ‘saving’ the economy.

It’s looking more and more like a major reset is around the corner as instability deteriorates day-by-day.

Captain Ahab

3 years ago

Yay! Go Brandon! He’s our man.

I think the realization is slowly sinking in. That the rest of his term remains is unfortunate

Tony Bennett

3 years ago

“Bond Yields are up across the board on the news and the stock market is sinking once again.”

…

Spring home selling season stepping to the plate. The average 30yr mortgage 100 bps higher than a year ago … existing home median price +15.4% (January over January). Good luck sellers. You’ll need it.

Scooot

3 years ago

Reply to Tony Bennett

They’ll be fewer foreign buyers of treasuries going forward as allocations change following the freezing of assets etc. Government will need to issue more debt. Additionally I doubt the recession will do much to bring down prices and the Fed certainly can’t do much about it.

Higher yields is my guess.

Tony Bennett

3 years ago

Reply to Scooot

“Additionally I doubt the recession will do much to bring down prices”

…

Are you serious?

Housing is about to CRATER.

Scooot

3 years ago

Reply to Tony Bennett

I don’t mean asset prices, I mean food, energy etc, the general cost of living.

I agree many asset prices are ripe for a massive correction.

BowserB46

3 years ago

Reply to Tony Bennett

Tony, I remember the 1970’s. As a young accountant, I did what my friends did. Buy a house you can’t afford counting on the next raise to make the payments affordable. Three years later, sell the house at a big gain and buy a bigger house you can’t afford. I got lucky and stopped trading up before the crash in 1982 when thousands, maybe tens or hundreds of thousands, saw their houses worth less than they owed on their mortgages. In any case, throughout the inflationary recession (stagflation), home prices continued up and continued to be sold.

Tony Bennett

3 years ago

Reply to BowserB46

A few differences.

1) Demographics. Back then average age 29. Now 39. Boomers were just hitting their (spending) stride. Not only are we older but population growth slowing mightily.

2) Houses were much more affordable (along with insurance / property tax).

3) Household debt burden much greater now (and skewed to lower percentiles).

edit: let me add that back then you had to have stellar credit + sizeable down payment (skin in the game). Now? Low down payment makes walking away easy. 2008 / 2009 / 2010 proved that.

Captain Ahab

3 years ago

Reply to Scooot

Higher yields mean lower bond prices–made worse by the ‘close to zero’ factor–you can’t not know ‘present value’. Add in lower stox… Price drop shocks scare the mom and pop investors. Crash coming up.

Scooot

3 years ago

Reply to Captain Ahab

Yes I agree, but food and energy prices will remain high. Stagflation. ( in my opinion )

Scooot

3 years ago

Reply to Scooot

Scooot

3 years ago

Reply to Captain Ahab

“you can’t not know ‘present value’.”

Yes, lower bond prices, I know all about this, I’m an ex bond trader.

Christoball

3 years ago

There really are no markets to save as stocks are about what they were a year ago. Short term flat returns are not historically rare and are mostly a problem because of inflation. Stocks, like cash are now in the same boat. Because inflation is so destructive, I expect Fed rate increases.

Tony Bennett

3 years ago

Reply to Christoball

Yes.

At the end of the day (we are there) US hegemony at risk if $US unravels. Rate hikes will accentuate (hard) recession, but will have benefit of knee capping Russia (tanking oil) and China (record surplus with US will shrink) and their budding axis.

StukiMoi

3 years ago

Reply to Tony Bennett

While reduced demand, from a poorer dollar sphere, will “tank” oil in absolute terms; oil is one of the items which will tank the least. Similarly, the saps stuck in that poorer dollar sphere, will shift more spending to lowest cost providers. Combined, it’s hard to see how this will not increase the share of the earth’s total real wealth accruing to both Russia and China.

Over time, that’s how things will go either way. When you have three guys: One who produces all the natural resources, another all the higher order goods made from those resources, and a third doing nothing other than printing faces on paper pieces and talking smack and “deeming” and “holding” the others; it’s not rocket science to figure out who among them will eventually be routed around and forgotten.

Tony Bennett

3 years ago

Reply to StukiMoi

“oil is one of the items which will tank the least.”

…

We’ll see. I heard that a lot Summer of 2008 as oil hit $144 barrel.

StukiMoi

3 years ago

Reply to Christoball

“There really are no markets to save as stocks are about what they were a year ago.”

Which still leaves them what….? 3 orders of magnitude higher than they were pre Fed?

You can pretty much guarantee The Fed will continue to “save” them going forward. The same way they have “saved” them thus far: By continuing to rob America’s dwindling class of productives.

Tony Bennett

3 years ago

Reply to StukiMoi

“You can pretty much guarantee The Fed will continue to “save” them going forward.”

…

Yes. But Crash first.

Big Wall Street banks are the owners of the Federal Reserve. Enough said.

Scooot

3 years ago

Reply to Tony Bennett

“You can pretty much guarantee The Fed will continue to “save” them going forward.”

Not whilst the cost of living is so high and rising. Politicians are already feeling the heat and trying to blame it on the war.

Tony Bennett

3 years ago

Reply to Scooot

Correct. A hard recession needed to break inflation psychology … no other way. THEN the Cavalry rides to the rescue.

Scooot

3 years ago

Reply to Tony Bennett

We agree, except on the cost of living affect of the slow down/recession and the general direction of bond yields. 🙂

Tony Bennett

3 years ago

Reply to Scooot

No, we’re compatible on COL. I don’t see a big drop in CPI … a few small year over year negative prints will be it … at best.

I’m still a big bond bull. We have to go through the “process” first.

Scooot

3 years ago

Reply to Tony Bennett

“I’m still a big bond bull.”

Well, you might be right, who really knows. As I said, I’m currently a bond bear.

It looks highly likely to me the Fed is going to adopt a softly softly approach to hiking, so just 25bp as and when for a prolonged time period. The market will interpret this as not enough from an inflation viewpoint. In reality if they hiked 2 or 3% it wouldn’t bring the COL down at the moment but if rates were at a more normal rate they’d be better positioned to boost confidence at some later date by cutting.

This, combined with fewer Treasury buyers as the Fed ceases QE, reserve reallocations against the dollar as a result of recent geopolitics, more debt issuance due to increased defence and other spending, higher interest costs & lower tax revenues is what leads me to be bearish. But then, the bond bull market has gone on for so long you never know.

StukiMoi

3 years ago

Reply to Scooot

The cost of living has been high and rising for 50+ years. Never stopped The Fed from saving their favored leeches by robbing the rest before.

But I suppose one can always hope Goldman and the rest are left alone to go belly up this time….

More likely, this time it will be “the war’s fault.” So we “need” to bail the leeches out again. As always. Lest “the syyystem colaaaapses.” And the dupes will, again as always, go along.

StukiMoi

3 years ago

Reply to Tony Bennett

“Big Wall Street banks are the owners of the Federal Reserve.”

Hence, they will be saved. By The Fed. At, as always, productive people’s expense.

Which severely limits how much “crashing” will be allowed to take place.

Christoball

3 years ago

Reply to StukiMoi

“Which still leaves them what….? 3 orders of magnitude higher than they were pre Fed?”

In the short term; Two big steps up, One big step down is a lot when they are big steps

KidHorn

3 years ago

Another big social security COLA next year. Wonder how it will be paid for.

dbannist

3 years ago

Reply to KidHorn

This, I think, will be the hot topic politically in the USA over the next 10 years.

Higher taxes or reduced benefits or a combination of both?

I don’t expect benefits to actually be cut. That would NEVER fly politically. But there are ways to cut benefits that are “hidden” like increasing the age you can get them. They can also tie the COLA increases to a yet still more edited CPI gauge that skews lower.

SS is in trouble. It will be fixed. Whatever course we take to fix it will skew GDP lower for years to come.

StukiMoi

3 years ago

Reply to dbannist

“They can also tie the COLA increases to a yet still more edited CPI gauge that skews lower.”

That’s the beauty of having completely arbitrary, entirely unconstrained power. Along with a population stupid, pliant and indoctrinated enough, to not even recognize this.

BowserB46

3 years ago

Reply to dbannist

Age for full benefits has already been extended but could be again. Also the wage ceiling for SS taxes could be removed as it has been done for Medicare tax. Besides inflation and the “demand” for COLA, the baby boom over the next ten years will be fully in the benefits side of the program, while the Millenials are still looking for jobs in their useless degrees and massive college debt. Meanwhile the minimum wage jobs, thanks to $15 an our minimum wage, will largely be moved to automation and illegal aliens, and with Social Security, Earned Income Credit, and Unemployment compensation, America becomes a welfare nation.

Christoball

3 years ago

Reply to KidHorn

Legacy retirement and health care benefits are what destroyed more than a few big corporations. Although the argument goes that increased interest rates will cripple government with borrowing costs, so will Cola and health costs. It was once said, “GM is a health and benefits company with an auto company attached.”

Roadrunner12

3 years ago

Reply to Christoball

“GM is a health and benefits company with an auto company attached.”

I also heard it said years ago, “GM wasnt a car company, it was a pension plan”

There is a retirement crisis on its way.

BowserB46

3 years ago

Reply to Roadrunner12

GM was also called a finance company with an auto company attached. Clearly, it’s not been an automobile company for a long time. I still get a little sick when I think about my ’79 Buick–my last GM car. Ever.

Roadrunner12

3 years ago

Reply to BowserB46

I was always an Oldsmobile guy. My 1st car was a 69 Cutlass, paid $500 and like any 16 yr old kid, immediately put in a $700 Pioneer stereo system. Then switched over to Delta 88 until they stopped making them. Now drive a Honda Civic. Needless to say my gas costs have been cut in half. I was shocked when I first filled the Civic up, it cost $35 when normally I was putting in $70 plus to fill up the Delta. Still get the same distance pretty much per tank.

Christoball

3 years ago

Reply to Roadrunner12

I think Roger Smith said that “I’m not running a car company I am running a health insurance company.”

BowserB46

3 years ago

Reply to Christoball

Legacy pension and health benefits…a big problem not just for corporations but governments. City employees, police, fire, etc. have retained conventional defined benefit plans when corporations switched to 401(k). The city where I lived had a pension time bomb looming even before the pandemic. In Texas, it’s all about property tax, since there is no state income tax. It’s why I moved out to a small suburban city where big city property taxes couldn’t get me directly, and threaten my home as they’ve done to so many retired people.

Christoball

3 years ago

Reply to BowserB46

I always thought that inflating away public pension benefits was Plan A. Cola and Health benefits plus pension fund performance can put a monkey wrench in that so they have had to have Plan B, Plan C etc….. What if Pandemics and Wars are all just Secret Plans D and E to save Public Pensions.

Christoball

3 years ago

Reply to Christoball

Perhaps Government will become a health and benefits company with a Police State and War Machine attached to it.

TCW

3 years ago

Reply to KidHorn

At some point I expect the RMD age to drop dramatically. That would force withdrawals and more taxes to be paid by those with fat 401k/ira.

Consumer Price Index Jumps to 7.9 Percent, Another New Four-Decades High

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