Core CPI Up Most Since January 1991

The BLS CPI Report shows another sharp month-over-month rise, but year-over-year is another matter.

CPI Month-Over Month

  • The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in July on a seasonally adjusted basis, the same increase as in June. 
  • The gasoline index continued to rise in July after increasing sharply in June and accounted for about one quarter of the monthly increase in the seasonally adjusted all items index. 
  • The energy index increased 2.5 percent in July as the gasoline index rose 5.6 percent. 
  • The food index decreased 0.4 percent in July, with the index for food at home declining 1.1 percent. 
  • The index for all items less food and energy rose 0.6 percent in July, its largest increase since January 1991. 
  • The index for motor vehicle insurance increased sharply in July, as it did the previous month. The indexes for shelter, communication, used cars and trucks, and medical care also increased in July, while the index for recreation declined. 

CPI Year Over-Year

CPI and Core CPI Year Over Year for July 2020
  • The all items index increased 1.0 percent for the 12 months ending July, a larger increase than the 0.6- percent rise for the period ending June. 
  • The index for all items less food and energy increased 1.6 percent over the last 12 months. 
  • The food index increased 4.1 percent over the last 12 months, with the index for food at home rising 4.6 percent. 
  • Despite increasing in July, the energy index fell 11.2 percent over the last 12 months. 

Word About Measurement From the BLS

Data collection by personal visit for the Consumer Price Index (CPI) program has been suspended since March 16, 2020. When possible, data normally collected by personal visit were collected either online or by phone. Additionally, data collection in July was affected by the temporary closing or limited operations of certain types of establishments. These factors resulted in an increase in the number of prices considered temporarily unavailable and imputed. While the CPI program attempted to collect as much data as possible, many indexes are based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published this month. 

Poor Measure of Inflation

These indexes supposedly measure inflation.

They do nothing of the kind. The indexes do not include home prices, only rent.

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The purported medical inflation is a joke. Anyone who buys their own medical insurance will tell you their costs are up more than the reported 5.9%.

Anyone in college has not been pleased with the rising cost of tuition and rent in college towns.

And anyone with an ounce of common sense knows the current stock market bubble is a measure of inflation.

Focus on Consumer Inflation is Horribly Wrong

Stock prices are not "consumer" inflation, but realistically home prices are. 

Regardless, the Fed's focus on consumer inflation ignoring housing, while averaging medical costs with those on company plans and Medicare is just plain wrong.

Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse 

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Fed Can Blame Itself 

 I am not blaming the Fed for the coronavirus and these shocks. 

However, I am blaming the Fed for its erroneous inflationary tactics that blew three of the biggest economic bubble in succession: 2000, 2007, 2020. 

Mish

Year-Over-Year Core CPI Jumps Most Since 2008

Economists expected a 0.2% rise in the CPI but not a new high in the year-over-year core CPI.

CPI Jumps 0.41% in March: Gasoline, Up 6.5%, Core CPI Up 0.15%

The CPI jumped 0.4% in March but core CPI, excluding food and energy only rose 0.1%.

CPI Rises 0.3%, Core 0.1%, Both More Subdued Than Expected

The CPI and the CPI excluding food and energy both underperformed economists' expectations by 0.1 percentage points.