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

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

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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

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

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

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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Mike Shedlock

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StukiMoi
StukiMoi
4 years ago
In Argentina as well, it did eventually get to the point, where no matter how far the PR men in charge of so called official statistics bent over backwards; in an attempt to sustain the illusion that the place was anything other than a third world dump devoid of any value creation whatsoever; the reality of empty shelves, power outages and outright starvation was simply too obvious to keep covering up.
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TheWindowCleaner
TheWindowCleaner
4 years ago
The way to control inflation is to implement the libertarian’s wet dream of beneficial price and asset deflation, and the way to do that is to integrate the new monetary and financial paradigm of Direct and Reciprocal Monetary Gifting via a 50% discount/rebate policy at retail sale and a second 50% debt jubilee policy at the point of loan signing. Neither of these policies would interfere with price discovery, and price inflation could be minimalized by cutting taxes at least in half if an enterprise does not raise their prices and taxing any price inflation at the rate of 100% that is not justified by genuine increased costs…while factoring in the tremendous income tax savings just mentioned and the cost savings of eliminating the payroll taxes every enterprise pays for welfare, unemployment insurance and social security which a $1000/mo. universal dividend paired with the 50% discount/rebate policy at retail sale would make redundant and hence able to be eliminated.  Your taxes of course do not pay for government as they are rubbished upon arriving at the IRS. New bonds pay for all government services. Taxation is 95% theft and 5% cuddgle to (presently) attempt to insure that less than ethical and rational commercial agents comply with laws that create and maintain a reasonable and enlightened social contract.
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Tony Bennett
Tony Bennett
4 years ago
Well, when BLS comes out with cpi they also do a report on real wages.
Last report (October):
“Real average hourly earnings decreased 1.2 percent, seasonally adjusted, from October 2020 to October
2021. The change in real average hourly earnings combined with a decrease of 0.3 percent in the
average workweek resulted in a 1.6-percent decrease in real average weekly earnings over this period.”
November  real wages – the envelope , please:
“Real average hourly earnings decreased 1.9 percent, seasonally adjusted, from November 2020 to
November 2021. The change in real average hourly earnings combined with no change in the average
workweek resulted in a 1.9-percent decrease in real average weekly earnings over this period.”
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Scooot
Scooot
4 years ago
Reply to  Tony Bennett

Everyone will want a pay rise to compensate. 

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Carl_R
Carl_R
4 years ago
Reply to  Scooot
Of course. And of course, businesses will want to increase prices to cover the extra wages. And of  course, both cut back a bit on spending to make up the difference. That’s how you get to stagflation. Many seem to think that the only two options are a booming economy with inflation, or a declining economy with deflation. Those who lived through the 1970’s realize that there is a third option. 
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Karlmarx
Karlmarx
4 years ago
Reply to  Carl_R
At least in the 1970s real interest rates were positive – that was why mortgages cost 18 percent.  Today there is zero incentive to save and invest.  Back then, even with inflation there was a positive return on investment.  Stagflation was due to higher prices because of wage push, huge increases in energy costs, and delinking of the dollar and gold.  This was coupled to huge economic declines that resulted from the introduction of environmental regulations, the cost of the Vietnam War, and a move toward outsourcing (the creation of the rust belt) as containerization took over ocean shipping making it much less costly to move goods.
Today, government, business, and consumers are engaged in a mass speculation frenzy  since there is no incentive to save or invest, and lenders that pay you to take their money.  Debt to actual GDP is skyrocketing and what little seed corn is still in the economy will be ate when the bubble bursts.
Add this to some sort of strange cultural revolution (yeah just like Mao’s) that is going on right now, and there is something much scarier than stagflation on the horizon if you ask me.
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Scooot
Scooot
4 years ago
Reply to  Carl_R
I lived through it too. A three day week, electric being cut off for a few hours every night so we all had to use candles. 15% mortgage rates and inflation in the high teens.
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Captain Ahab
Captain Ahab
4 years ago
The Fed’s theft from savers continues, albeit at an increased pace, with more Mom and Pop investors forced into risky investments.
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KidHorn
KidHorn
4 years ago
Should produce some hefty COLAs next year. A perfect storm if the FED does indeed taper like they claim. My guess is they’ll continue to say they’re tapering without actually tapering.
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Karlmarx
Karlmarx
4 years ago
Central Banks are screwed.  They have no tools to deal with the mess that they (and the politicians, don’t forget the politicians on all sides of the aisle) have created.  With inflation rates continuing to rise (and yes Mish, with no end in sight) and interest rates in the toilet, there is not an annuity, whole life policy, pension fund, you name it that can survive in the long term.  Remember, the last time inflation was high in the US so were interest rates so there was an offset. 
And no, the socialist idea of printing or stealing money wont work either.
There is likely to be a worldwide debt jubilee in my opinion.  Its going to seriously suck but its probably the only way to reset this nightmare that the elites have created.  This is not a zero percent possibility.  The last one that i can recall was in in 1953, when most of Germany’s external debt was cancelled.
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thimk
thimk
4 years ago
2022 mid terms . GOP reclaims both house and senate 
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Carl_R
Carl_R
4 years ago
Reply to  thimk
The only thing that might save the Democrats is if Trump increases his involvement, and I don’t think that even that would be enough. So far, though, he’s only working on selected races, such as getting Kemp out of the Governorship of Georgia, as he holds a grudge against Kemp and other Georgia Republicans for following the law. I’m pretty sure he’ll be able to tip the Governorship to Abrams, but as for keeping the Senate and House in the hands of Democrats, I think that’s more than even he can do. Granted, he was able to tip the Senate to Democrats in 2020 by sabotaging the Georgia Senate races, so I it’s possible, I suppose that I may be underestimating him.
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KidHorn
KidHorn
4 years ago
Reply to  Carl_R
The only thing is cheating.
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Captain Ahab
Captain Ahab
4 years ago
Reply to  Carl_R
What may save the Democrats? A complicit media, the same as the last time, and the time before that.
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Intelligentyetidiot
Intelligentyetidiot
4 years ago
My president said BBB will help to fight inflation.
If so, lets make BBB 100 times bigger, to get this inflation beast under control faster.
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dbannist
dbannist
4 years ago
Reply to  Intelligentyetidiot
I’ll go for that.I’ll use my 75,000 monthly stimulus (current child tax credit x100) for my three kids to buy a rental house once a month to counter the inflation that would result.Under that scenario, I’ll do quite well, as long as I do not delay at all to buy the home.
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killben
killben
4 years ago
“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.”
Does this mean long as the stock market is on its way to the moon, one can expect inflation to continue?
“The bond market does not seem concerned about inflation over the long haul.”
Reading the 2 statements together would mean the bond market expects the stock market crash.
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Carl_R
Carl_R
4 years ago
Reply to  killben
Stocks and bonds have a positive correlation, though, so it’s unlikely that stocks could crash without bonds crashing as well. I think it’s more a case that there is a lot of money sloshing around, so both markets have momentum….until they don’t.
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Captain Ahab
Captain Ahab
4 years ago
Reply to  killben
Bonds are in the irrational phase, same as stocks. No one is thinking about forces stronger than the Fed can control driving interest rates up a few points, let alone 5-7% justified by economic conditions into the foreseeable future.
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Carl_R
Carl_R
4 years ago
Reply to  Captain Ahab
Having the bonds move to 5% would indeed be a crash, and yes, it would imply a crash in stocks, too, since the PE tends to be 1/interest, which would imply that the market PE would fall to 13 or so. My point is that stocks and bonds will move the same direction. If one crashes, the other will. Thus, it is incorrect to say that because bonds are not crashing they are projecting that stocks will crash. Neither are crashing at the moment, so the party continues, and it will continue until it doesn’t.
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1-shot
1-shot
4 years ago
The only surprise her is that the number wasn’t HIGHER
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FromBrussels
FromBrussels
4 years ago
the 10 year should be at 7 % at least…..Just imagine what a fkn insane financial meltdown this would create on a global scale if this were to happen , even 3% would cause incredible havoc, showing exactly what a insane, unsustainable, cheap money driven fn Ponzi scheme CBs have created in hardly a decade !  We ll never get out of this situation unscathed, that s for sure……Mish never asks these days, so I will :  got gold ?   ….Don t   think crypto will save your behind, it s part of global INSANITY too….
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Scooot
Scooot
4 years ago
Reply to  FromBrussels
Yes 10 year is currently yielding a real return of -5.3 versus zero for Gold, so quite a pick up. 
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Anon1970
Anon1970
4 years ago
Reply to  Scooot
In 1988, when inflation was running at about 5% annually according to Mish’s chart, 10 year Treasuries came to market at about 8%. It was my one and only participation in a non-competitive tender at a Treasury auction. Investors were being paid a premium of about 3% over inflation to buy Treasury notes and bonds. These days, bonds are a sucker’s game. 
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Eddie_T
Eddie_T
4 years ago
We’ll just have to see what they do. Hikes are hikes but dot plots are bullish!t. 
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