Rent rose another 0.4 percent in April. Food and beverages were flat with food at home declining but food away from home rising. 
Bloomberg Econoday economists were correct across the board on the April CPI report. As expected, the CPI rose 0.3 percent, 0.3 percent excluding food and energy, and 3.4 percent year-over-year.
CPI Food
Food was the bright spot in April, provided you eat at home. Food at home declined 0.2 percent with food away from home rising 0.3 percent. Overall, food was unchanged.
CPI Month-Over-Month Medical Care
I added this series new this month. It is so amazingly volatile and unbelievably so. The year-over-year chart makes it easier to spot trends.
CPI Month-Over-Month Energy and Gasoline
Energy is another very volatile series. The last three months have not been good to consumers.
Month-Over-Month Synopsis
- CPI: +0.3 percent
- CPI excluding food and energy: +0.3 percent
- Rent: +0.4 percent
- Owners’ Equivalent Rent OER: +0.4 percent
- Food at Home: -0.2 percent
- Food Away From Home: +0.3 percent
- Medical Care Commodities: +0.4 percent
- Medical Care Services: +0.4 percent
- Energy: +1.1 percent
- Gasoline: +2.8 percent
Other than food at home, there is not that much to cheer about this month. Rent remains the killer.
Yet Another Groundhog Day for Rent
Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.4 percent in April. Rent of primary residence has gone up at least 0.4 percent for 32 consecutive months!
The “rents are falling” (or soon will) projections have been based on the price of new leases and cherry picked markets. But existing leases, much more important, keep rising.
Only 8 to 9 percent of renters move each year. It’s been a huge mistake thinking new leases and finished construction would drive rent prices.
Most leases renew in May through August. I expect rent to moderate soon.
Also see Quotes of the Day on Rent Inflation By the Fed and Property Managers
CPI Year-Over-Year Percent Change
CPI Year-Over-Year Percent Change Food
CPI Year-Over-Year Percent Change Medical Care
CPI Year-Over-Year Details
- The CPI is up 3.4 percent from a year ago. That’s negative progress compared to the 3.0 percent registered in June of 2023, 10 months ago.
- Rent of primary residence and shelter are up 5.5 percent from a year ago.
- Food and beverage is up 2.2 percent from a year ago and perhaps as good as it gets.
- CPI excluding food an energy, a measure the Fed closely follows is up 3.6 percent from a year ago. That’s 1.6 percentage points higher than the Fed’s 2.0 percent target.
- Energy is up 2.6 percent from a year ago. Gasoline is up 1.2 percent from a year ago. Electricity is up 5.1 percent. Natural gas is down 1.9 percent,
Medical care services is on an ominous trend. This is especially important because the Fed’s preferred measure of inflation is the Personal Consumption Expenditures (PCE) price index, not the CPI. PCE overweighs medical care relative to the CPI which overweighs rent.
Final Thoughts
Other than food, there’s not all that much to cheer about.
That will change if and when rent abates which I do expect in one of the next two CPI reports.
Key Question
But after the inevitable high fives of inflation victory cheers, we must look further ahead. Here’s the key question: Is the decline in the rate of inflation permanent or trsnsitory?
Put me in the camp that says the inflation rise was real, and the decline will be transitory. There are inflationary and deflationary forces, but the scales are not even.
Biden’s energy policy is inflationary; student loan cancellations are inflationary; the push for union wages are inflationary; the inflation reduction act is inflationary; tariffs (both Trump and Biden are guilty) are inflationary; deficit spending is inflationary.
Producer Price Inflation Has Bottomed and Is Now Heading Back Up
Yesterday, I noted Producer Price Inflation Has Bottomed and Is Now Heading Back Up
Producer prices were a bit higher than expected today but negative revisions take that away. Importantly, prices appear to have bottomed.
Joe Biden vs Joe Biden on Tariffs, a Green Trade War Is Underway
Joe Biden’s changing story of tariffs would be funny if it was not so damaging. The president announced huge new tariffs today.
The Above Tweet was from June 11, 2019.
Yesterday, president Biden blasted China with huge new tariffs. For discussion, please see Joe Biden vs Joe Biden on Tariffs, a Green Trade War Is Underway
Also see Biden Wants EVs so Badly That He Will Quadruple Tariffs on Them
Astute readers will immediately notice the title of this post makes no sense. It’s not supposed to. But it is exactly what President Biden is doing.
A big green trade war has started. The result will be higher prices for cars, solar panels, even lumber, and housing.
It Trump was clueless, what does that make Biden who took Trump’s policies and escalated them?
My base case is a huge, damaging trade war no matter who wins the election in November. I have been talking about this for months. Mainstream media is finally starting to pick up on the idea.
Mr. Market is already convinced rate cuts are coming, ASAP.
Mr. Market’s paper army is going to get slaughtered this summer, imo.
My property taxes in my city and neighbor city rose up to 40% starting in 2024. I have a rental and I will need to raise rent by at least 10% to cover this increase.
Mish, good job on Coast to Coast AM tonight.
As you and your family struggle under rising food costs, rising gasoline costs, rising home heating costs, staggering property tax increases, staggering commuting cost increases, heart attack inducing ObamaCare costs and failing infrastructure after paying for hundreds of billions of “shovel ready projects”… As you try to figure out what to do with the side effects of your mRNA shot that never should have happened – the NIH didn’t need to spend tax dollars to create covid and Congress didn’t need to send billions to Pfizer for a dangerous shot that has a 50/50 effective rate. As you wonder why the government cannot protect US borders or stop crime in US cities, as you wonder why said cities are covered in homeless tents, as you open your credit card bill and home equity loan statements…
Know that Secretary of State Anthony Blinken flew to Kiev Ukraine in three separate taxpayer funded jets (he has a very large entourage), plus two military security jets, plus a private jet carrying the CSPAN film crew… all so little SecState Anthony could play guitar in a Kiev dive bar.
No carbon offset was purchased for the six planes, because no one believes that anymore.
Zelensky, for his part, signed the checks for the millions in improvements he had made to his vacation villa in ITALY (not in Ukraine). Zelensky then turned his attention to the non-existent defensive lines around Kharkiv. Billions of US taxpayer dollars were spent on shoring up defense positions; turns out the money was embezzled by “someone” and the defensive lines do not exist. Zelensky is puzzled, but the improvements to his Italian villa have nothing to do with it
Using the helpful rule of 72, you can figure out how many years at a given return does it take money to double. The rule of 72 also allows you to figure how many years it takes to devalue a currency in half at a given inflation rate. There is nothing Benign about 3.4% inflation, as it illustrates that 72 divided by 3.4 equals 21 years 64 days, 9 hours 52 minutes, and 56.469 seconds for money to loose half of it’s value.
Inflation is not simple inflation, but is compound inflation.
Rent control is also a factor of why rents continue to rise for existing leases. In many large cities, the increase per year was limited to below the rate of inflation. The city of Los Angeles for example had no rental increases during the pandemic from March 2020 to Jan 2024, and this year is limited to 4%. As many renters are paying less than full market value, landlords will always raise the rent for these rent controlled units when they are legally able.
Ribeye over $19/lb
When it’s back to $8.99/lb then food will be a bright spot.
I’m NOT paying these prices
FUCK Jerome Powell. Biggest failure in FED history
I just paid $6.99 for T-Bones
Great deal.
Wow. Great find. I would have cleared the store out.
The Fed causes homelessness. Change my mind.
I would argue that a bigger reason was the closing of mental institutions, where the homeless belong. You could give these drug-addicted lunatics a brand new house for absolutely free and it would be completely destroyed in less than a year. They’re literally zombies. After one chance at rehabilitation, they should be rounded up and taken to a killing field. Probably 1-in-100 are homeless because of financial circumstances not of their own doing.
Soylent Green – it’s people!
The fed just makes it cheaper for the homeless to borrow back the money Congress transferred to wealthy campaign donors.
re: medical care. Many of the comments in economy based youtube channels are reporting that hospitals are now requiring surgeries to be prepaid before they will put someone under the knife. In some of these cases, deductible is required to be paid up front; in others, the cost of the entire surgery- with the hospital suggesting that the insurance company will reimburse the patient instead of the hospital! This takes credit retrenchment of policy to a whole new level.
This started with Obamacare. Obamacare is a joke for those that get it free or pay very little. If you can’t afford traditional insurance it’s as good as being uninsured. What good is free/cheap health insurance if you have a $3,000, $5,000+ deductible. There are so many that schedule appointments, tests, surgeries and then don’t pay. Many people have high deductibles. We pay A LOT of money for our healthcare insurance through my husbands work and we have a $3,000 deductible. I’m tired of having to pay more to compensate for the uninsured and those who walk away from obligations. Hopefully this practice will teach some people to prioritze expenses and save for the unexpected medical expenses.
“Obamacare is a joke for those that get it free or pay very little. If you can’t afford traditional insurance it’s as good as being uninsured.”
That’s not true, the ACA only allows standard plans, namely Blue Cross.
The problem with Obamacare is actually that, they’re great plans, but the costs aren’t reduced, instead the costs are redistributed according to income level.
That’s the real problem with U.S. healthcare, relative to the rest of the world we are far more expensive and far less effective, having a lobby in D.C. and making massive campaign donations really pays off.
You really should talk to someone that’s actually on the ACA before extolling wisdom about it, my nephew used it for a coupe of years when he was starting his own business.
I’ve already done exensive research as I was contemplating getting on Obamacare previously. It was cheaper for me to take COBRA than Obamacare. I’ll have to take Obamacare after my 18 months of COBRA are up until I can get on Medicare. I have over 9 years experience in the insurance industry. My brother is an insurance agent. I know there are several plans but the plans that are free/cheap for low income have HIGH deductibles. How do you expect someone who can’t afford health insurance to come up with thousands of dollars for a surgery, tests, etc. Also, not all hospitals, Dr.’s, etc accept Obamcare insurance. The hospital closest to me doesn’t accept Obamacare plans with United Health Care. Not all Obamacare plans are Blue Cross.
Before Obamacare you’d be eligible for nothing if you’re low income.
Atop that, existing conditions would also render you uninsurable.
The real solution is one that removes insurance altogether and brings healthcare costs in line with true supply/demand.
Until then, as long as money flows into campaign funds & SuperPAC’s, healthcare costs will soar, the government will supplement what regular people can’t afford and the debt will keep spiraling.
Before and after Obamacare low income gets Medicaid. Many Doctors and providers don’t accept Medicaid. You can have long waits (6 months) for a visit with a specialist, tests, surgery, etc unless it’s a life threatening emergency.
Not from what I’m told. I’ve been told many policies don’t even cover surgery but that’s hearsay from unhappy customers.
My dentist requires payment up front. Currently, my insurance company is not paying our claims. The insurer claims it’s a computer hack but we haven’t received any checks since February dental work totaling 1k. My wife just visited her doctor and had to provide a credit card in case deductibles weren’t paid by insurance.
Neither financial transactions nor “animal spirits” are random:
American, Yale Professor Irving Fisher – 1920 2nd edition: “The Purchasing Power of Money”:
“If the principles here advocated are correct, the purchasing power of money — or its reciprocal, the level of prices — depends exclusively on five definite factors:
(1) the volume of money in circulation;
(2) its velocity of circulation;
(3) the volume of bank deposits subject to check;
(4) its velocity; and
(5) the volume of trade.
“Each of these five magnitudes is extremely definite, and their relation to the purchasing power of money is definitely expressed by an “equation of exchange.”
We will guarantee you a cozy place under the bridge, and your food is also getting cheaper. Vote Biden.
Home prices are at an extreme, we need more homes.
Short real estate, long builders.
A decrease in the rate of inflation is likely nowhere on the horizon. Deflation is a pipe dream. Simply look at who is buying the treasury’s securities. The Fed monitized 1.94 percent of the debt so far in 2024. This compares to about 0.24 percent in 2019. This, along with regulations and low productivity are the causes of inflation.
Concrete went from $175 a yard last year to $250 now. Copper is flying, weat corn soyb moving up, gold up. Lumber is right back up to the top.
This is irreleant. The BLS, ie economic politburo, always excludes items that are going up in price especially food. If one type of redmeat product goes up they substitutse with something cheaper, recently deleted coffee because of that. The statisitcs are deliberatly “massaged” to under report true inflation. The main beneficiary of this deliberate lie is the govt itself and wall street second. Its basicaly the fox guarding the chicken coop. The finanical press goes along with this deception like the example of the king without clothes.
Stop paying attention to the phony “seasonally adjusted” CPI figures that the media broadcasts. It’s bad enough the CPI figures understate inflation, but the seasonal adjustments are meaningless because those aren’t the figures social security uses to determine COLAs.
The CPI figure that actually goes into the history books (CPI-W 1984 unadjusted) shows month over month inflation at 0.427%, or 5.1% on an annualized basis.
One item that reduced CPI was used car price deflation, it was down 6.6%, that took it down 20 basis points. i\If not for that the cpi would have read .5%.
Hints of progress on rent inflation at least. MoM primary rent 0.35 vs 0.41, lowest MoM since 8/2021. Not big relief but at least something. There was some small progress hidden by rounding in the reference above. Like Mish has noted, it’s driven by renewal rent increases, but that divergence between new effective rents and renewal rents has to go away at some point.
The inflation numbers are total bs and anyone with half a brain knows this to be true.
And while everyone is cheering the high 3.4% annual inflation rate, I’ve been looking at the latest social security snapshot. The April report shows 198,000 brand new socialists to a new high of 72,228m costing $120.2 billion dollars per month and growing.
https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/
What could possibly go wrong with millions of people retiring each year being handed $120.2 billion in free money (and healthcare) while there aren’t enough young people coming into the system to keep it propped up?
Throw in trade wars, de-globalization, depleting skilled labor force, no kiddos, and ever growing demand from 8 billion screaming people on the planet and you get only one thing…turtles all the way down and inflation all the way up.
Death panels
Already handled that without death panels thru the covid-clot-shot.
No, dat’s bad capitalism.
Put ’em to work building the wall, then building homes to solve the labor shortage.
Retirees burning through savings to cope with inflation already so they may be forced back to work.
https://www.msn.com/en-us/money/personalfinance/retirees-drain-savings-faster-to-cope-with-inflation/ar-BB1mqPmU
“Higher withdrawals are one reason Boston College projects that inflation caused a 14.2% decline in the financial wealth held by middle-income retirees between 2021 and 2025. (If rising interest rates trigger a recession, their wealth would decline 16.6%.)”
Boomers will be fine, SSA is adjusted for inflation, it’s my generation I’m worried about.
Zoomers are scarily aloof, insulated, and a disconnected populace always ends badly for it’s politics/economics.
Boomers bought the idea that a movie star knew economics, this generation scares me even more.
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“Throw in trade wars, de-globalization, depleting skilled labor force, no kiddos, and ever growing demand from 8 billion screaming people on the planet and you get only one thing…turtles all the way down and inflation all the way up.”
Wrong, as any truck driver knows from listening to conservative AM radio, job creating tax cuts for the wealthy solve all problems.
If we cut all taxes on incomes above $1 mil, the tricklin’ down will get fierce, and somehow the debt will resolve itself as the jobs are created in countries like China with dramatically lower labor costs.
It doesn’t seem to make sense, but it does, because Fox news says so.
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Across the country, school districts are broke, city budgets are broke, states budget are broke, federal budget is broke, most people are broke. We have $34 trillion dollars in debt which begs the question, where the heck is all the money if everyone is broke?
Most of it’s owed to ourselves in the future.
When you buy TBills, you are buying government debt which means that you are one of the creditors of that 34 trillion dollars which is ironic since technically we are all responsible for a part of that debt.
So when we see things like each individual American is responsible for say 100K of the national debt, if you have 100K in TBills you are a net zero.
“We have $34 trillion dollars in debt which begs the question, where the heck is all the money if everyone is broke?”
Chinese economy, all the “job creating tax cuts” we’ve been doling out since 1980 have created the jobs there, C-suites have eaten the gains without passing the savings to the consumer.
The top 1% owns 50% of all stocks ($25 tril), CEO salaries have gone from 100X median to 600X since 1980.
The top 1% also own 100% of the government (because bribery is now “free speech”).
I used to vote Conservative, but then, math happened.
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For all the hoopla about tax rates, tax revenues generally stay about the same. Federal receipts as a percentage of GDP have averaged about 17% since the 1940s with minor deviations on either side. Changing tax rates has little effect on tax revenues.
One thing is certain: the rich will never pay more in taxes. They pay better accountants, tax lawyers, and lobbyists if the tax rates go too high. The purpose of high tax rates is to increase the value of lobbying (quid pro quos are not only legal, they are also standard operating procedure with our government). If tax rates are lowered, the rich don’t need to waste time and effort moving their funds around to avoid taxes, and they can instead focus on growing their wealth, which does eventually benefit those further down the ladder.
The biggest benefit comes when you slash real tax revenues and actually fire government workers. This eliminates some of the boots squelching the private sector and increases the labor supply available to the private sector. Furthermore, this lowers taxes actually paid by the private economy, freeing up capital to be put to more productive use (a triple boost to the economy, unlike “stimulus” which is inevitably a net negative). Unfortunately the government seldom takes the opportunity to voluntarily shrink itself (I don’t think it has meaningfully shrunk since Coolidge was POTUS).
“If tax rates are lowered, the rich don’t need to waste time and effort moving their funds around to avoid taxes, and they can instead focus on growing their wealth, which does eventually benefit those further down the ladder.”
Over a long enough time frame, maybe it does trickle down, but apparently 45 years isn’t enough to exhibit even a fraction of that, the prove lies in –
Fred, Household income to debt ratio for is near double since 1980, from 65% to 110%.
Government debt to GDP is triple over the same time while domestic spending increases, in part to offset the depletion of wage growth. (food stamps, SSA, stimulus…etc)
Real wages have not grown with inflation, we finally got back to where we were in 1970 in 2020, that’s break-even, not growth.
So, where I’ll give you “eventually” trickle-down “might” work, and it obviously hasn’t “kicked in” yet after 45 years,…
How long will it take? 100 years? 500 years?
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Those who work for rich people often fare better than the mean. The problem isn’t that the wealthy are doing something wrong. The problem is the runaway expansion of government.
Do you know why real wealth in the US has flatlined since 1970? Because per capita energy consumption also flatlined. To grow wealth, you need more energy. Our government has stood in the way of every major energy idea they can. They’ve pushed the rainbows and unicorns idea with wind and solar, which are expensive and unreliable rather than permitting pipelines for our abundant nat gas and building on the nuclear expertise and research we had in the 1960s.
But that’s all ancillary to my previous comment. The problem with the economy has absolutely nothing to do with taxes going up or down. You picked out a single point in my comment while missing the whole picture: tax rates are irrelevant. “Trickle down” is a meaningless idea pushed to make folks like you focus on the wrong boogeyman. The problem is government. If we had true tax revenue cuts that actually shrank government, we’d see progress. But the government never shrinks. Thus, the parasite gets bigger while the host gets weaker.
“Those who work for rich people often fare better than the mean. “
By default, most employers are rich, that said, can you provide statistical data to prove wealthier employers pay more?
My stats are easily referenced on Fred.
I own and operate my own business, I actually avoid marketing wealthy demographics for the fact that they more frequently want more for less.
“Do you know why real wealth in the US has flatlined since 1970? Because per capita energy consumption also flatlined. To grow wealth, you need more energy. Our government has stood in the way of every major energy idea they can. They’ve pushed the rainbows and unicorns idea with wind and solar,”
Cafe standards have magnified fuel mileage, saving trillions in fuel costs, a 4 cylinder gets as much HP as an 8 cylinder did 3 decades go.
You seem to work in the sector, you’re assuming oil & gas are the entire economy, silly, silly.