Key CPI Year-Over-Year Points
- Year-over-year the CPI fell from 8.5% in March to 8.3% in April.
- This is the first year-over-year decline since August of 2021 and only the second since October of 2020.
- The Fed has been hugely behind the inflation curve since early 2021.
CPI Year-Over-Year Details
- Overall: +8.3%
- Less Food and Energy: +6.2%
- Shelter: +5.1%
- Medical Care Services: +3.5%
- Rent of Primary Residence: +4.8%
- Owners’ Equivalent Rent (OER): +4.8%
- Food and Beverages: 9.0%
- Gasoline: 43.6%
CPI-Month-Over-Month
CPI Month-Over-Month Details
- All Items: +0.3%
- Food and Beverage: +0.8%
- All Items Except Food and Energy: +0.6%
Economists Miss the Mark
The Bloomberg Econoday consensus was 0.2% month-over-month and 8.1% year-over-year vs 0.3% and 8.3% actuals.
Excluding food and energy, economists expected 0.4% month-over-month vs 0.6% actual. Excluding food and energy, economists expected 6.0% year-over-year vs 6.2% actual.
All four economists’ estimates were too low.
Is Any of This Believable?
That’s the question of the day. Think about it for a second.
There is one item that I believe. Food prices jumped 0.8% in April.
My huge gripe is shelter.
Rent and OER Year-Over-Year
Key Shelter Points
- Year-over-year rent was only up 3.8% in January and 4.8% in April.
- Year-over-year OER was only up 4.1% in January and 4.8% in April.
- OER is 23.816% of the CPI in April.
- Rent is 7.278% of the CPI in April.
OER is the mythical price one would pay to rent one’s own house from himself, unfurnished, and without utilities.
Is rent and OER only up 4.8%? If you believe that, then the CPI numbers are believable.
Otherwise, take 31% of the CPI, and factor in your rent increase to come up with your CPI.
Calculating Your Year-Over-Year CPI
8.3 – (0.31 * 4.8) + (0.31 * Your Year-Over-Year Rent Increase) = Your CPI.
If you are one of the lucky few whose rent did not go up more than 4.8%, your CPI will be lower.
What About Housing Prices?
My second beef is none of this factors in actual home prices.
We can also arrive at a much higher CPI if instead of rent we substitute actual home prices.
Factoring in home prices gives way to the debate that home prices are not a consumer item.
OK, so what?
Is inflation important or just consumer inflation?
Housing-Adjusted CPI Inflation Hits New Record High Dating to 1987
For an alternate CPI calculation that includes home prices, please see Housing-Adjusted CPI Inflation Hits New Record High Dating to 1987.
But no matter how you slice it, the Fed has blown another major asset bubble with a myopic look at alleged consumer prices that for most are not even correct.
This post originated at MishTalk.Com.
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All employees
Real average hourly earnings for all employees decreased 0.1 percent from March to April, seasonally
adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3
percent in average hourly earnings combined with an increase of 0.3 percent in the Consumer Price
Index for All Urban Consumers (CPI-U).
Real average weekly earnings were essentially unchanged over the month due to the change in real
average hourly earnings combined with no change in the average workweek.
Real average hourly earnings decreased 2.6 percent, seasonally adjusted, from April 2021 to April 2022.
The change in real average hourly earnings combined with a decrease of 0.9 percent in the average
workweek resulted in a 3.4-percent decrease in real average weekly earnings over this period.