There are two very troubling aspects of the latest BLS CPI report. Did you spot them?
Month-Over-Month Shelter Percent Change
- Shelter: 0.61 percent
- Owners’ Equivalent Rent: 0.53 percent
- Rent of Primary Residence: 0.55 percent
Those are all hot numbers. More importantly, the disinflationary trend in shelter appears to be over.
CPI Year-Over-Year Shelter
Shelter Year-Over-Year Percent Change Shelter
- CPI: 3.8 percent
- Shelter: 3.3 percent
- Owner’s Equivalent Rent: 3.3 percent
- Rent of Primary Residence: 2.8 percent
Components of CPI Percentage Weights
Shelter is 35.32 percent of the CPI.
It’s difficult to have CPI disinflation with rising shelter. It’s nearly impossible to have disinflation with shelter, food, and energy all jumping.
CPI Month-Over-Month
CPI Month-Over-Month
- All Items: 0.64 percent
- All Items Excluding Food and Energy: 0.38 percent
- Food and Beverage: 0.49 percent
- Shelter: 0.61 percent
- Owners’ Equivalent Rent: 0.53
- Rent of Primary Residence: 0.55
- Medical Care Services: 0.00 percent
- Medical Care Commodities: -0.35 percent
- Energy: 3.81 percent
- Gasoline: 5.44 percent
- Food at Home: 0.68 percent
- Food Away from Home: 0.23
That list is the second troubling aspect of the report.
Inflation is very broad based.
Medical care was the only good aspect of the report. Medical car commodities are only 1.45 percent of the CPI. Medical Care Services are 6.893 percent of the CPI.
Nothing else looks any good.
Looking Ahead
Year-over-year numbers are heavily influenced by month-over-month numbers a year ago.
The all items CPI rose 0.10 percent in May of 2025. All Items excluding food and energy rose 0.13 percent in May of 2025.
Numbers higher than the above will make the year-over-year number rise.
Does anyone think we will not have another year-over-year blast still higher next month?
I believe we are going to see reported year-over-year inflation about 4.2 next month up from 3.8 percent. And if energy misbehaves, not even 4.5 percent would be shocking.
For more discussion of the April CPI, please see CPI Hotter than Expected, Highest in Three Years, a Genuine Disaster
Inflation in April was another scorcher. Here are some month-over-month and year-over-year charts.
Also see Real Hourly Earnings Decline Again, No Growth Since Trump Took Office
If it feels like you are not getting ahead, it’s because you aren’t. Six charts.
When it comes to food inflation over the next year, another factor that needs to be considered is the record breaking el nino which is developing. All of the models now project that this will be at least in the category of a super el nino (+2 degrees), and many now suggest a record setting el nino (+3 degrees). The effects of a super el nino are complex and differ around the world, but on a global basis the yields of rice, wheat, cocoa and coffee decrease (so expect weather related inflation to come in those commodities) while yields of soybeans increase (so some offsetting deflation there). A trip to the grocery store is going to get even more expensive this fall/winter.
Mish there is a third. You forgot trumps rage.
The implications of yesterday’s CPI number combined with today’s PPI is that the Fed is behind by at least two quarter point rates hikes.
PPI even hotter than CPI, Rate cuts?
Inflation is transitory! Lol. 32% chance of rate HIKE in December, 59% chance of a rate HIKE in April.
Cutting rates now would be pure lunacy.
@TheGarlandNixon
BREAKING NEWS: White House insiders leak that President Trump has taken the hardline position that either Iran will bow to his demands or he will finish losing the war, crashing the US economy, and obliterating his presidency.’
The economy is already crashed.
April PPI triple expectations!
1.4% vs 0.5% est.
2 year treasury above 4% now! bwahahahahaha.
Oh the humanity!
“It’s Trump turtles all the way down and inflation all the way up!”
Kenny Rogers knew when to hold them and to fold them. Kenny was smarter than Trump.