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Inflation Hits a 39-Year High in November, the Biggest Rise Since 1982

The CPI rose another 0.8% in November following a 0.9% rise in October. Year-Over-Year the CPI is up 6.8% the most since 1982.
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CPI Year-Over-Year Percent Change NSA 2021-11

Consumer prices are on a tear again in November. The BLS reports a month-over-month increase of another 0.8% following a jump of 0.9% in October.

Key Year-Over-Year Details 

  • The all items index rose 6.8 percent for the 12 months ending November.
  • The index for all items less food and energy rose 4.9 percent over the last 12 months
  • The energy index rose 33.3 percent over the last year
  • The food index increased 6.1 percent, food and beverages 5.8%
  • These changes are the largest 12-month increases in at least 13 years in the respective series.  

CPI Year-Over-Year Since 1971

CPI Year-Over-Year Percent Change NSA Since 1971 2021-11

Long-Term Key Details 

  • The all items index rose 6.8 percent for the 12 months ending November, the largest 12-month increase since the period ending June 1982. 
  • CPI Less Food and Energy (Core CPI) rose 4.9 percent, the largest 12-month increase since the period ending June 1991. 
  • CPI Shelter rose 3.8 percent, the largest 12-month increase since the period ending April 2007. 

CPI Month-Over-Month

CPI Month-Over-Month 2021-11

Month-Over-Month Details

  • The monthly all items seasonally adjusted increase was the result of broad increases in most component indexes, similar to last month. 
  • The indexes for gasoline, shelter, food, used cars and trucks, and new vehicles were among the larger contributors. 
  • The energy index rose 3.5 percent in November as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. 
  • The food index increased 0.7 percent as the index for food at home rose 0.8 percent. 
  • The index for all items less food and energy rose 0.5 percent in November following a 0.6-percent increase in October. 
  • Along with shelter, used cars and trucks, and new vehicles, the indexes for household furnishings and operations, apparel, and airline fares were among those that increased. 
  • The index for household furnishings and operations increased in November, rising 0.8 percent, the same increase as in October. 
  • The apparel index rose 1.3 percent in November after being unchanged in October. 
  • The index for airline fares turned up in November, rising 4.7 percent after declining in recent months. 
  • The medical care index also rose in November, increasing 0.2 percent after rising 0.5 percent in October. The index for physicians’ services rose 0.4 percent, and the index for prescription drugs increased 0.3 percent, while the index for hospital services declined 0.3 percent. 
  • A few indexes declined in November. The motor vehicle insurance index fell 0.8 percent over the month after being unchanged in October. The recreation index fell 0.2 percent in November after rising in each of the last 9 months. The index for communication also declined 0.2 percent in November.

Atrocious Numbers

The numbers seem atrocious because they are atrocious. 

They are also understated.  A discussion of the Percentage weights shows why.

CPI Makeup

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CPI percentage weights 2020

Owners' Equivalent Rent (OER) is the largest single item in the CPI at 24.26%. It is the mythical price one would pay to rent one's own house from himself, unfurnished and without utilities. 

Housing prices are not in the CPI nor are asset bubbles and rent is understated. 

The problem with this approach is bubbles are very much a part of inflation and the Fed's focus on "consumer" inflation is simply wrong. 

Year-over-year housing prices are up a whopping 19.1% as of September (the latest numbers) but hardly anyone counts that as "inflation" and they should, even if it's not "consumer inflation".

Bond Market Reaction

Despite the mammoth numbers, the bond market reaction was mute. Yields are down across the board. 

The 30-year long bond yield is 1.84% as of 9:42 Central, down 2 basis points. 

The bond market does not seem concerned about inflation over the long haul. It's debatable why. But the best rationale is that the Fed blew another huge set of bubbles in the stock market and housing, and bubbles burst.

If the stock market crashes, as is increasingly likely, demand will dry up across the board and inflation will be the last thing on anyone's mind. 

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