A 2.5 percent decline in energy smoothed the CPI. But for the 27th straight month, the cost of rent rose at least 0.4 percent. 
Groundhog Day for Rent
I repeat my core key theme for two years now. People keep telling me rents are falling, I keep saying they aren’t.
Rent of primary residence, the cost that best equates to the rent people pay, jumped 0.5 percent. Rent of primary residence has gone up at least 0.4 percent for 27 consecutive months!
All these “rents are falling” projections have been based on the price of new leases, but existing leases, vastly more important, keep rising.
With rents out of the way, Let’s tune into the BLS Report for the details.
CPI Month-Over-Month Details
- The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on a seasonally adjusted basis, after increasing 0.4 percent in September
- The index for shelter continued to rise in October, offsetting a decline in the gasoline index and resulting in the seasonally adjusted index being unchanged over the month.
- The energy index fell 2.5 percent over the month as a 5.0-percent decline in the gasoline index more than offset increases in other energy component indexes.
- The food index increased 0.3 percent in October, after rising 0.2 percent in September. The index for food at home increased 0.3 percent over the month while the index for food away from home rose 0.4 percent.
- The index for all items less food and energy rose 0.2 percent in October, after rising 0.3 percent in September. Indexes which increased in October include rent, owners’ equivalent rent, motor vehicle insurance, medical care, recreation, and personal care.
- The indexes for lodging away from home, used cars and trucks, communication, and airline fares were among those that decreased over the month.
CPI Year-Over-Year
CPI Year-Over-Year Details
- Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment. The all items index rose 3.2 percent for the 12 months ending October, a smaller increase than the 3.7- percent increase for the 12 months ending September.
- The all items less food and energy index rose 4.0 percent over the last 12 months, its smallest 12-month change since the period ending in September 2021.
- The energy index decreased 4.5 percent for the 12 months ending October, and the food index increased 3.3 percent over the last year.
CPI Thoughts and a Sour Mood
The market is cheering this data loudly, but other than the huge drop in energy, this was not a benign report.
People can cut back on some things but rent and food are not in that list.
Why Are Americans in Such a Rotten Mood? Biden Blames the Media
For discussion, please see Why Are Americans in Such a Rotten Mood? Biden Blames the Media
For discussion of the latest polls, please see Five Alarm Bell – Biden Trails Trump in Five of Six Battleground States
On November 8, I reported Credit Card Delinquencies Surge as Consumer Debt Tops $17 Trillion
I will do a detailed report of food shortly. But rent, food, and unpopular energy mandates from the Biden administration have people in a sour mood.
link to bls.gov The BLS changed how they calculate medical insurance in the CPI to look at insurer’s profit margins rather than the cost of the insurance itself.
CPI is laughable. Oil created inflation in Aug/Sept but now oil has retreated with it’s slow response at the pump. Now people can go, it’s time to spend, lower prices, holidays, I can afford more debit. CPI will be up again. The Fed is broken to control.
I love economics. It math but you can make 2+2=5 if the world view needs it! “Adjustments”. Unless you made a mistake, adjustments are really fuzzy math
So , THAT is why the fc kn Euro is UP almost 2% ! ….What a fc kn ponzi scheme house of cards, desperate casino world !
Yeah no kidding
There are two reasons why rent will continue to grow. 1) Large numbers of properties bought by hedge funds and private equity with 0% “buddy loans” money over the last 14 years have now been removed from the supply — increasing rents and 2) Property taxes rise and rise because you have to pay for all the pensions of non-Federal government employees who get a pension of 70-90% of pay for life plus health care. The number of people turning 50 will continue to rise for the next 20 years (while people turning 65 and 16 will fall for the next 15 years), and civil servants retire as fast as they are eligible (50s). That pension money has to come from somewhere …
Regarding #1.What does Hedge fund buying have to do with it. All those homes were bought and leased so that added to rental inventory. If that buying dried up, then either regular people bought homes outright to live in (so they no longer need a rental which means fewer people trying to rent = lower rents due to lower demand) or someone else (mom and pop landlords) bought the homes and rented them (so rental inventory stays the same).
#2 is the real reason. Not just property taxes either. School taxes and especially home insurance and maintenance is really rising which gets passed on to renters (home owners also being squeezed by this too but it doesn’t show in the manner, it just shows as less disposable income for home owners).
THEY ALREADY TOOK THE CAR. nOW i CAN’T EVEN STAY HERE.
This is all junk numbers. I pay for my health insurance for over 22 years. Next year, in March, my health insurance goes up 400 bucks. I got to look for a new policy. I see nothing dropping in price. There was an article I read maybe a month ago that the author stated this inflation calculation is distorted. How? Everything has gone up from 25-100% and now the increases are going to be smaller, but what about the increase of 25-100%? I just use my eyes and checking account to tell me about inflation and I can tell you that inflation is out the wazoo.
Inflation is a killer if you are a renter, drive an older pick up truck and need to replace it, and your only grocery option is a premium brand.
For those of us who own our homes, drive small, economical cars, and can shop at lower cost brands (Aldi’s), it really isn’t noticeable.
But I reckon most folks fall into the first category, so I’m sure their mood is pretty sour. We need to get Trump back in and get more free checks sent to everyone and have him fire Powell and lower interest rates. And build a 3000 mile long wall and cut taxes. That should fix inflation and the deficit in short order!
“CPI unchanged”
There are lies, damned lies and the BLS (which should be renamed Ministry of Truth as in 1984).
That is true about rents. I cannot find it now but San Francisco Chronicle had a survey of what renters were actually paying and only a tiny sliver were paying the going market rates the rest were paying far less if anything. The rent inflation calculated on sites based on analytics sources like truflation are giving changes in market rates but the reality is that those paying less than market will see a different inflation rate and will gradually get marked towards market if the market price stops going up.
SHOCKER! Energy Prices Decline During Shoulder Season! Who knew?
Shoulder season?
September/October (and March/April), when there’s lower demand for oil and gas because it isn’t summer and it isn’t winter. Hence lower energy prices, usually.
It is amazing how the markets react to statistical noise … what is most amazing is that the Fed takes these numbers seriously as well, and mistakes coincidence for causation. Are they going to say that higher rates caused energy prices to come down, when it was just a supply/geopolitical event? And how does the Fed expect that higher rates will make rents cheaper and not in fact more expensive (as common sense would suggest). What the Fed is really doing is to cater to the neo-liberal folly of not wanting wages to ever rise ever, using a convenient narrative that makes wages earners the sole culprits for this inflation. Insane dishonesty, but mostly not sustainable.
Sustainable if everybody lives in old RVs and eat at soup kitchens That’s basically what they want right ?
“And how does the Fed expect that higher rates will make rents cheaper and not in fact more expensive …”
Try 25,000%, per minute, for a decade or two. You think rents would somehow increase??????
Rents, along with prices for everything, is continuing to rise because The Fed is not meaningfully raising any rate which matters. Those being expected, forward ones.
Everyone knows that The Fed is solely in the business of robbing productive people, in order to hand the loot to connected dilettante halfwits who can’t figure out how to produce anything, but who instead live off of pure welfare mediated by way of “asset appreciation.”
Long before rents drop meaningfully, The Fed will be lowering rates, bailing out connected illiterates and otherwise pumping up its welfare program; in Newspeak referred to as “asset prices”; again. Everyone realises that.
Hence noone cares one iota about whatever some rate happen to be for some utterly insignificant interlude right now. All this flash-in-the-pan interlude is, is The Fed pretending to have some other mission than welfare for connected idiots. Which they never did, never will, have. Enriching incompetent morons, who have been told paying a million for a shack any bunch of dudes outside Home Depot could replicate for <$100K, is somehow “doing the right/’smart’ thing”, is what The Fed exists for. It’s all they do. And maintaining the trivially idiotic illusion that <$100K shacks are somehow “worth” >$1million, is not compatible with meaningfully falling rents over any meaningful duration.
Time for my monthly Compound Dollar Devaluation Report, formerly called Compound Inflation Report. CPI is a Euphemism for Dollar Debasement. Prices have not gone up, but the dollar has become worth less ( two words), and requires more of them to purchase the same item.
Bear in mind that whatever assets or investments that one assesses at the current nominal value: it is in real value worth at least 18% less in 2020 dollars. Further more consider 15% Federal capital gains taxes, and for some state taxes. Some think they are hitting it out of the park, but inflation devalued dollars have to be considered.
Borrowed money is still in a surplus stage with more credit issued than speculative goods to purchase. I mention speculative goods because often these are essentials for survival and have a captured market. There are enough essential goods and actually no shortages. There is just a disruption of the equilibrium between the two by the way cheap money is used for speculation. Also the tax structure gives unearned income an advantage over that which is earned by labor. The problem is we cannot pay farmers not to grow money, like when there is an agricultural surplus.. We can only pay savers to not spend money by higher returns on savings. Money in savings is not lent out so does not contribute to inflation like other investment vehicles.There is no longer any fractional reserve lending because there is no longer a reserve requirement.
CPI, now called DOLLAR DEVALUATION INDEX or DDI for short, is only calculated Annually to minimize the appearances of a devaluing currency. If October 2023 Compound Dollar Devaluation were calculated Biennially it would be 11.2%, stating that dollars devalued 11.2% and are worth that much less than in October, 2021. This is a 1% rate drop from last months biennial Compound Dollar Devaluation of 12.2% . If October, 2023 Compound Dollar Devaluation were calculated triennially, it would be 18.04%, stating that dollars devalued 18.04% and are worth that much less than in October, 2020. This is a .22% rate drop from last months Triennial Compound Dollar Devaluation of 18.26% . PRICES ARE STILL GOING UP, BECAUSE THE BASE YEARS ARE ALREADY INFLATED.
I am including the Compound Dollar Devaluation numbers with 2007, 20012, and 2014 as base years. I choose these years because they were at time periods when oil was priced similar to today. Falling Oil was stated to have been responsible for the small rate decline in the current CPI report, but this means that other goods and services probably held steady or increased in price.
Compound Dollar Devaluation with. 2007 as the base year: 49.56%
Compound Dollar Devaluation with 2012 as the base year: 29.60%
Compound Dollar Devaluation with 2014 as the base year: 28.00%
DDI does not truly reflect the sky rocketing prices of necessities. CPI often minimizes the true affects of inflation for political reasons and to lower COLA increases for Social Security and Public Employee Pensions.
Once again inflation is not simple inflation but is compound inflation. Triennial Compound DDI is 11.92% greater than FED targeted 2% CPI goals for this same 3 year time period.
It would take nearly 6 years of ZERO PERCENT CPI to arrive at what the FED’s targeted 2% CPI would have produced with October, 2020 as the base month. I call this important number the “ZERO PERCENT CPI NEUTRAL AFFECT ADJUSTMENT INDICATOR” comically called ZPCpiNAAI for short.
Unregulated Non Banks have taken borrowed money that was too cheap to pass up and used it to financialize our economy through speculation and stock buybacks rather than capital investment. It is estimated that 5% of GDP is spent on stock buybacks rather than wages, factories or infrastructure. Corporations borrow money for stock buyback with the intent of stabilizing stock prices when insiders with stock options cash out.This greed does absolutely nothing for humanity. The price for the greedy to operate now is very expensive.
Much of inflation is speculative, and non productive. Whatever it takes to remove the speculative component out of the equation, and enhance the productive component in our economy is in order. War is also known to be inflationary.
Boom times are when society leverages borrowed money and lives beyond its means. Recessions are when society lives within its means. Boom times and inflation only benefit those with access to borrowed money first, everyone else suffers.
Worthless? Not really I’m going to buy 4 kilos .999 Gold this week with my stash of greenies before they are though
Money is not worthless, it is just worth less for many items.
Here in NC, gas costs about 3.10 a gallon a month ago.
It now costs 2.75. This is due to the lower margins on distillates compared to two months ago. Gas has been artificially inflated because of these high margins and has come down significantly.
I’d expect this to moderate and believe that oil is at a low at the moment, meaning no more significant falls in energy prices should be expected.
Winter grade gasoline is allowed to contain more of the highly evaporative butane as weather cools. This helps increase the gasoline supply in the winter months.
2.75 so cheaper than Poland Spring right? You are very lucky ,in that respect anyway
Here in Florida, I paid $2.99/gallon 2 weeks ago. Yesterday I paid $3.13/gallon.
Here on the east coast of Central Florida, gas at the local walmart is $2.97, and $3.12 at a Mobil down the road. Mobil looks to be trying to keep prices higher by making deals with various organizations to get 10 cents a gallon off if you buy from them. My grocery service, Kroger, is in on this. I thought it was a great idea until I noticed they were just jacking the price up by 10 cents.
I was reading a story about insurance fraud in Florida in auto glass and roofing Insurance companies aren’t pleased taking it up the back end
Fraud in Florida is a cottage industry. It’s everywhere in everything.
Sounds like a lovely place to live ( sarc)
oil is straight up!
Just wait till we bomb bomb Iran and they sink a ship in the gulf of Hormuz It’s all fun till they take out an eye
maybe I called the top
Top , we don’t need no stinkin top And I doubt that very much