Largest Monthly Leap Since August 2012
The BLS reports the Largest Month-Over-Month CPI Increase since August of 2012.
Month-Over-Month Details
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in March on a seasonally adjusted basis after rising 0.4 percent in February.
- The March 1-month increase was the largest rise since a 0.6-percent increase in August 2012.
- The gasoline index continued to increase, rising 9.1 percent in March and accounting for nearly half of the seasonally adjusted increase in the all items index. The natural gas index also rose, contributing to a 5.0-percent increase in the energy index over the month.
- The food index rose 0.1 percent in March, with the food at home index and the food away from home index both also rising 0.1 percent.
- The shelter index increased in March as did the motor vehicle insurance index, the recreation index, and the household furnishings and operations index.
- Indexes which decreased over the month include apparel and education.
- The index for all items less food and energy rose 0.3 percent in March.
CPI Year-Over-Year
Year-Over-Year Details
- Over the last 12 months, the all items index increased 2.6 percent before seasonal adjustment, a larger increase than the 1.7-percent reported for the period ending in February.
- The index for all items less food and energy rose 1.6 percent over the last 12 months, after increasing 1.3 percent over the 12 month period ending in February.
- The food index rose 3.5 percent over the last 12 months, while the energy index increased 13.2 percent over that period.
Medical Inflation
The CPI seriously underweights medical expenses by averaging in Medicare and Medicaid.
Healthcare services make up 17.75% of the PPI but only 6.97% of the CPI.
Ask anyone who buys their own medical insurance how fast rates are really rising.
For discussion please see Healthcare is the Biggest PPI Component With Over 3 Times Energy’s Weight
Energy
Motor fuel is only 3.76% of the CPI. Even still, the 9.1% spike in gasoline contributed about half of the monthly increase.
Looking for Inflation?
It’s easy to have “low inflation” when you don’t count housing and undercount the cost of medical care.
Inflation is easy to find. Look at housing. Look at asset bubbles in stocks and junk bonds.
Case-Shiller Home Price Indexes
That chart shows repeat sales of the same house, a far better metric than median home prices, the most widely used measure of home prices.
Year-over-year, the CPI is only up 2.4%. The shelter index is up a mere 1.7%.
The Case Shiller National Home Price Index (December) is up a whopping 10.3%.
Home prices are not in the CPI, only rent and presumed rent one would pay as if renting one’s house from oneself.
Presumed rent is called Owners’ Equivalent Rent (OER) and it is the single largest component of the CPI with a weight of 24.26%.
If you are looking for inflation, the last place to look is where they tell you to look.
For discussion, please see Fed Hubris: Housing Prices Show the Fed is Making the Same Inflation Mistake.
The above link has 5 charts and important discussion of the Fed’s Third Great Mistake.
Mish
The gov and rbi could do little to lower or increase prices to clear excess supply/demand and even it may delay spending and growth… Otherthings remaining stable, if the rbi maintains a neutral stance or status quo, it would help stabilise demand/supply and prices and speculation by consumers and investors and producers… But, if it increases interest rate… supply and employment and demand would go down which would further increase price or inflation and expectations and worsen unemployment which could prolong adjustment…. and vice versa… Assuming inflation at the target, the rbi may decide nominal interest rate as per the demand and supply of money in the market or let the market decide.
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The CPI has been tracking the projection from the Moore inflation predictor. Here is their chart from last September, showing the forecast range and actual results:
Here is their current projection, which shows reported CPI rising for two more months before trending back down, but leaves open the possibility that the FED might be wrong:
In the UK there is also RPI, measuring retail prices with an arithmetic average. The CPI is the geometric mean. The CPI measures the geometric mean of the sequence 4,5,6 as 4.92
4.92… not 5
The current chancellor is facing legal action due to reclassifying government debts from the higher RPI to the lower CPI which would result in 80-90 billion GBP losses to pensioners.
To me, it seems like inflation would be best tracked by following the median price so as to ignore outliers. That this would be a good idea can be judged by its stony non-existence as a measure, although its certainly reasonable enough.
I would love to know what the median price at amazon has been over the last 20 years and its a shame there is no way to force the price data out of them.
To some extent I can see owners equivalent rent, but something that has been left out of all the inflation measures is the cost of saving itself. The cost of a 1000 (whichever currency) delivered in 2030 has been rising remorselessly for the last two decades.
If one buys a Silverado, better get a charging unit for your garage and never be more than 190 miles from home as a margin of error running out of juice if you live in an area without public charging stations. One benefit living in a big city is you don’t need a car. I sold mine when I retired 10 years ago . Good riddance.
Looking forward to that promised Chevy Silverado eV with 400 mile range on battery. I want one. That should help with the gas bill.
You could make a case that gas prices have been depressed for a couple years and are getting back to “normal” I guess. Of all the markets, oil always been the toughest to get a handle on…price fluctuates so much, and often for reasons I have a hard time really understanding.
They will go down when rates go up. Rates will go up sooner than people think imo.
Once they figure out that electrics don’t contribute to the Highway Users Trust Fund, your electric won’t be so cheap.
True of course, but you have to take advantage of these little arbitrages while the opportunity exists. 🙂
It’s been working fine for years now though , I’m on my 3rd eV already. Screw the road tax.
Fwiw, if I charge the vehicle at work, there will still be another arbitrage. My gas isn’t even tax deductible, but my office electric bill is an expense item. Ka-ching.