CPI Month-Over-Month Key Points
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in September on a
seasonally adjusted basis after rising 0.4 percent in August, according to the U.S. Bureau of Labor Statistics. - The index for used cars and trucks continued to rise sharply and accounted for most of the monthly increase in the seasonally adjusted all items index. The index for used cars and trucks rose 6.7 percent in September, its largest monthly increase since February 1969.
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The food index was unchanged, with an increase in 0.8 percent in September.
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The energy index rose 0.8 percent in September as the index for natural gas increased 4.2 percent.
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The index for all items less food and energy rose 0.2 percent in September after larger increases in July
CPI and Core CPI Year-Over-Year
Year-Over-Year Key Details
- Over the last 12 months, the all items index rose 1.4 percent for the 12 months ending September, a slightly larger increase than the 1.3-percent rise for the 12-month period ending August.
- The index for all items less food and energy rose 1.7 percent over the last 12 months, the same increase as the period ending August.
- The food index increased 3.9 percent over the last 12 months, while the energy index declined 7.7 percent.
Poor Measure of Inflation
These indexes supposedly measure inflation.
They do nothing of the kind. The indexes do not include home prices, only rent.
Anyone who buys their own medical insurance will tell you their costs are up more than the reported 4.9%.
Anyone in college has not been pleased with the rising cost of tuition and rent in college towns.
And anyone with an ounce of common sense knows the current stock market bubble is a measure of inflation.
Fed Myopia
The Fed’s focus on consumer inflation ignoring housing, while averaging medical costs with those on company plans and Medicare is just plain wrong.
Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse
For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?
Fed Can Blame Itself
I am not blaming the Fed for the coronavirus.
However, I am blaming the Fed for its erroneous inflationary tactics that blew three of the biggest economic bubble in succession: 2000, 2007, 2020.
The Fed wants more inflation to make up for the lack of it in prior years. They are totally clueless how to measure it.
Mish
“Anyone who buys their own medical insurance will tell you their costs are up more than the reported 4.9%.”
My wife’s went down in 2020 by 8%. Thanks to the socialists controlling my Colorado state government.
Costs are expected to decline in 2021 by 1% or increase by 2% depending upon which news story you read.
In 2010 I paid 155 a month for single coverage. I have two kids and a wife, now and make above the subsidy cutoff. I pay 20k a year now. Deductible is a hair under 15k.
What am I supposed to do?
Coronavirus has killed public transit in big cities, suddenly millions of folks need cars temporarily
Yes, oddly I have noticed that the value of my car has gone up this year, instead of down. That makes no sense.
You track the value of your car from year to year? I generally just assume that’s a another number that will be sure to disappoint me…and I almost never look, unless I have to put together a loan app and figure out my net worth. Banks always ask what your car is worth and what you owe.
But I have yet to have a loan officer tell me “Hey, you have great equity in that Chevy!”
People moving out of cities, super low interest rates(negative rail), and of course new car production being shut down.
Why is easy. How it ends s hard to predict.
I take it the Hertz bankruptcy is no longer impacting used car pricing??
I looked at Hertz for a good low mileage pick up truck, no way, their prices were just absurdly high. I don’t know hwo they expect to get rid of them other than to corporate fleets or some such.
This was about the threat of Hertz dumping used vehicles into the market
Yeah, I was looking a few weeks ago, maybe they are threatening, but at their current prices they will not meet the judge’s deadline. That is the real problem, the BK plan the judge approved calls for them to have sales goals by unit per a certain date, so Hertz really has no choice, they will try to get the best price they can but as the deadlines loom they have no choice but to sell at any price they can get.
From July: The cars are housed in an entity linked to Hertz’s asset-backed securities and leased to the rental giant. Normally, when a company with ABS files for bankruptcy, it must choose to confirm or reject the entire master lease tied to the debt. If it keeps the lease, it has to continue making payments on the vehicles as it offloads them piecemeal. If it walks away, all of the collateral is liquidated to pay back bondholders.
““It’s going to be a real showdown,” said Philip Brendel, analyst with Bloomberg Intelligence. “Hertz is taking an aggressive posture, but if it rejects the master lease, it doesn’t have a fleet and this bankruptcy looks more like a liquidation.”
The corporation structure was pretty deeply confusing, but it looks like Hertz played just a bit too much hardball and may have to liquidate nearly half a million cars before the end of the year.
If you want to read a fascinating review of what is happening with the company, particularly their attempt to finance bankruptcy proceedings with a new 1 billion raised by selling new stock that was utterly worthless read this:
That’s another thing……If we’d just built that wall, then illegal immigrants wouldn’t be driving up used pick-up prices.
(Just kidding.)
We have had our Acura dealer send us letters trying to get us to sell our cars noting they have buyers who are looking for our specific models promising they can get us top dollar. The problem is we don’t want to buy new and eat the depreciation combined with used cars apparently are harder to find.
That’s a scam, what the dealers are telling you. Don’t let it influence your decisions on when to trade cars…..
Of course I won’t. I do think they are having problems finding used Acuras in my town, but to trade means I am losing money in depreciation as we have friends who also drive Acura that have issues finding one after they were in a wreck earlier this year.
RR, interstting that they want to give rock bottom for trade in’s though. I was at BMW for an oil change last week and they had a gorgeous 740i on the floor marked down from $95 and change to $75 and change, but I know they are going to try to get me out of my 2013 328i at as low a price as possible resulting in higher payments, so I just drooled on it for a while then went out for a smoke.
“ Central banks’ seriously misguided attempts to defeat routine consumer price deflation”
Could it be that asset price inflation was always the objective? That our leaders knew back in the 70s that cheap labor was on the way with Nixon’s China trip and NAFTA and the maquiladoras ready to roll? If labor is around 60% or so of the retail price, that strategy would keep consumer inflation down but leave plenty of room to debase the currency, which can be great for asset prices.
One thing is for sure…they figured out how to get LOWER inflation numbers back when that was a desirable goal…they kept changing the criteria until the numbers were as low as they wanted…it seems unlikely that they aren’t aware of the history, especially when John Williams keeps reminding them…I’m sure they are aware of his work…..not that they would admit it.
So, they are gaming the numbers and they know they are….so the only question is:
Cui prodest?
Patricians
Price deflation for consumers? I would like to see that, my grocery bills are skyrocking at well over 20% annual and some items, basic staples even, have gone up 100, 200, and more percent. Not just food either.
But it doesn’t matter what brand of administration comes to power. The government wants low inflation numbers and they will get it no matter how they need to manipulate the underlying components.
SS increase this year is a measly 1.3%. No word yet on how much Medicare cost will increase.
Inflation? It is wildly out of control, groceries are starting to match the stock market’s increases, and the government/fed needs a certain number to justify their polcy decisions, so they will just make up whatever plug number is needed. Seriously, I paid $5 for two jars of mayo in February, yesterday they went up to $6 per jar. That is not even inflation at all, it is hyperinflation.
It’s only a matter of time before inflation gets out of control. Pandora’s box has been opened and the presses will not cool down until every asset is consumed by the wealthy and powerful. Inflation only helps debt holders and asset holders.
How long this last is anyone’s guess but everyone knows it’s not going to stop until it can’t go on.