The BLS reports consumer prices are in negative territory for the month with both the CPI and core CPI in negative territory.
Year-over-year the CPI is up 1.4% and core CPI, which excluded food and energy is up 0.3%
Year-Over-Year CPI
CPI Details
- The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008.
- A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well.
- Food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974.
- The index for all items less food and energy fell 0.4 percent in April, the largest monthly decline in the history of the series, which dates to 1957.
- The indexes for used cars and trucks and recreation also declined.
- The indexes for rent, owners’ equivalent rent, medical care, and household furnishings and operations all increased in April.
- The all items index increased 0.3 percent for the 12 months ending April, the smallest 12-month increase since October 2015. The index for all items less food and energy increased 1.4 percent over the last 12 months, its smallest increase since April 2011.
- The food index rose 3.5 percent over the last 12 months, its largest 12-month increase since February 2012.
Mish Personal Results
I had a photography trip that I cancelled then rescheduled for the exact same time.
- Airline ticket dropped from $800 to $600
- Car rental dropped from $800 to $300
- Hotel dropped from $130 a night to $80 a night
Now is a great time to travel if you are in good health and can practice Social Distancing. The airlines require use of masks.
Mish
US grocery costs jump the most in 46 years, led by rising prices for meat and eggs
Here it comes, they will remove fuel which is up more than 10% in the last week alone, and groceries from the CPI and my annual COLA along with millions of others will not reflect the inflation that is coming. Deja Vu the Carter years when we had 12 and 15% inflation and 1 or 2 percent raises. Lost 30-40 percent of our buying power in just a few years, and that more than anything else was why Reagan won in 1980.
“Here it comes”
…
Absolutely.
But not what you think. Deflation.
The 2 elements you mentioned groceries (“food at home” in cpi represents 7.652% of index) and energy (6.256% of index) will be drowned out by much larger components – especially shelter and transportation.
I believe I actually said in many other posts that we will get deflation in some economic sectors but inflation in others and I stick by that. Consumer non durable is going to go up fast, consumer durables will go down eventually. The Fed and federal government are just not going to let asset classes decline, you can yell deflation all you want the Fed has said they will spend any amount and they are already buying ETFs and junk bonds. The fat orange one has decided to buy farm commodities, even parishables, to keep farm (your food) prices up and rising.
Look, if they have decided to devalue the currency and they have, we WILL get inflation. They will crush supply or buy it up themselves to keep deflation from happening and they have point blank said that for MONTHS now.
I’m curious to hear Mish’s thoughts on the inflation/deflation issue with a bit longer term horizon.
I’m on board with short term deflation, but medium/long term it’s much muddier than the 2008 crisis.
Inflationary forces not present in 2008 that come into play down the road:
Trade war and de-globalization
Bankruptcies and Covid related shutdowns resulting in massive supply reductions
Government handouts on a far greater scale than 2008
At what point do those three outweigh the huge drop in demand. And do they matter enough to create more than the nominal 2% inflation?
NBC News report today about food prices going uncomfortably up
They need to split things up. The CPI is just worthless.
Consumption price index. (What the CPI is supposed to be)
Asset price index API
Care price index
Would be for consumable products. Food, light bulbs, clothing, and anything else that is commonly replaced.
Stocks, houses, and anything else that is used to store wealth
Health insurance, college, home insurance and anything else that the median household might pay for monthly.
This is a pipe dream though because the idea behind the CPI is to hide information.
The secret here TtoT is that they don’t even check prices anymore. They have a federal reserve bankster monetary policy that requires a certain price level and so they make up a plug number to fit that. Mind you they used to check prices but under Reagan that changed, they still did some checking but when they got results they did not like they started to massage the discrepancies out of existence via a whole bag full of tricks, like hedonic adjustments and weighting changes. That is how motel 6 became motel $79.99 on weekends. That is how I paid 11 cents a pack for cigarettes when I was in the Air Force and was paying $11 in New York and California. Neat 9,900% increase that one and not counted because smoking is bad for you. It is also how the median price of a new car went from $4,500 in the mid seventies to $45,000 now for a 900% increase.
The trouble with all this is that in the same time my pay has risen from $1,000 per month to $4,200 per month, 320%. A loaf of bread went from $0.49 to now $5.79 and yeah the bread is better, but it is still just a loaf of bread.
The AVERAGE person used to live better and more secure lifes back then, certainly less complicated. And that is another thing, even as prices for necessities have risen so has the number of items that we are sold, I clearly remember when grocery stores sold GROCERIES! And a few household products like toilet paper and aluminum foil. Laundry soaps. Now a typical supermarket can have more than 40,000 different items. How did some things get to cost so much, like we went from 10 cents for a light bulb to $7 for a light bulb. A 6,900% increase, and yeah it will last longer and use less energy, but it is still seven bucks for A lightbulb.
So many things that we are supposed to buy and pay so much for promise to recoup that increase via savings, like the glass in my kitchen and bedroom doors. Old single pane would cost a couple hundred to replace both. And you could do it yourself. New double pane will set you back many hundreds each but the energy savings over the expected lifetime allegedly recoups that so they pay for themselves. The house I just bought has two such doors that leaked and now have to be replaced at $1,500 for windows and labor. What they don’t say is the single panes have virtually no insulation (R) value, but these double panes will raise that up to R1 or 2. An R value of 5 is considered ULTRA EFFICIENT and costs more than all the other windows in your house put together. So my windows are maybe 6 or 7 years old and have to be replaced, they have condensation in them that means they do not even serve as windows no less insulating windows, and I can see clumps of mold on the glass forming. I will be replacing them with cheaper single pane glass because the doubles are so much more and if you have to replace them every decade or so the cost is enormous, they cannot ever pay themselves off from energy savings.
All told, the economy is no longer rational. Societies and civilizations that become fundamentally irrational in the past have always reached the point of collapse.
Wait until the commercial RE market gets inundated with all the buildings no longer needed due to business bankruptcies. That will be the catalyst for real deflation, as debt default gets the supercharging effect of leverage.
I guess travelling within US you are not quarantined.
In Spain, UK and various other countries it is still two weeks, so very little international tourism till whenever. Ryanair is targetting 40% of its flights working for start of July, but I don’t think the schedule countries are going to follow is known for more than a couple weeks ahead. I’ll post
as source again because details are concise in the thread there. More questions than answers though.
How long the state of alarm in Spain lasts seems based on restrictions on interprovincial travel, a main justification being used is that the restrictions on freedom of movement within Spain cannot be enforced without it. So, they are talking of lifting it when “de-escalation” is complete, meaning at least not before all provinces meet criteria that allow freedom of travel, which is taken to be at least all of June. They are apparently looking for the renewal of state of alarm to be monthly, not every two weeks.
At the same time there is “a call from all southern countries” for a large spending package from EU. There are different articles outlining different sides to what is being asked, and France is counted as in. I guess by the end of summer all these governments will be on their knees to EU.. oh, they already were…I guess by the end of summer they will be manically devising how to sell their countries to EU all over again, what is left of them, to save them…etc…. and the various economies will be so disastrous by that point that a lot of people in the south will subscribe.
An extra dollop of “black box magic” with this report:
Coronavirus (COVID-19) Pandemic Impact on April 2020 Consumer Price Index Data
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 April 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.
CPI down 2 months in a row.
Sounds Inflationary.
Not interested in wine…but not happy about the 25-30% increase in food service sized ice cream buckets…
On the other hand, I have seen no drop in wine prices.
Ask me if care about any other prices.
Not having to get up for work next morning, makes up for closed restaurants and bars, it seems….
Do you care about any other prices ?
No.
We only drive 4K miles/year so not much on motor fuel.
We love food so price of groceries does not matter.
Gas and electricity are reasonable.
Property taxes are only 0.5% of market value.
Our single largest expense is medical insurance and there won’t be any decreases there.
I live in a wine-producing area…
BUY AMERICAN!!!
Bring California wine country land prices down to $1/acre, and wine country housing costs down to $1/month/1000 sq/ft, and Californians just about may be able to survive selling wine at affordable prices again…..
I’m french and I buy 100% American wine my friend 🙂 mostly California and Washington State.
Actually, we mostly buy European wines. We prefer the style (more acidity) over USA wines.
We shop at a large liquor store (38000 sqft) and I keep asking for American wines in the Euro style and the reply is always: “not at your price point of $18/bottle”.