CPI Good News on Shelter and Energy But Food Jumps – MishTalk

The CPI was a mix of good and bad in September. The good outweighs the bad especially for renters. But what’s ahead?

The BLS reports the Consumer Price Index rose 0.2 percent in September

CPI Month-Over-Month Details

• The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis.
• The index for shelter rose 0.2 percent in September. But rent of primary residence rose 0.3 percent and owners’ equivalent rent was up 0.3 percent.
• The food at home index increased 0.4 percent in September and the food away from home index rose 0.3 percent over the month.
• The index for all items less food and energy rose 0.3 percent in September, as it did the preceding month.
• Indexes which increased in September include shelter, motor vehicle insurance, medical care, apparel, and airline fares. The indexes for recreation and communication were among those that decreased over the month.
• The energy index fell 1.9 percent over the month. Gasoline was down 4.1 percent.
• Medical care commodities fell 0.7 percent and medical care services rose 0.7 percent. This is another bit of bad news.

CPI Month-Over-Month Rent and OER

I believe these trends will continue as the supply of finished apartments rapidly increases.

Since shelter is 36.5 percent of the CPI, the good news overshadows the bad, for the month.

CPI Year-Over-Year

Year-Over-Year Details

• CPI: 2.4 Percent, Down from 2.5 Percent
• OER: 5.2 Percent, Down from 5.4 Percent
• Rent: 4.8 Percent, Down from 5.0 Percent
• Core CPI (excluding food and energy): 3.3 Percent, Up from 3.2 Percent
• Food and Beverage: 2.2 Percent, Up from 2.0 Percent

Energy was down 6.8 percent from a year ago. I don’t chart energy because it is so volatile that it blows the scale on every chart.

Looking Ahead

I expect further improvement in shelter, due to falling rent and OER. That is very good news given their weight in the CPI. Short term, the good new might end there.

The price of crude has spiked so energy costs will rise.

Medical care services is another hot spot that is bad news. Unfortunately, I expect the bad news will continue.

The hurricanes will drive up the cost of home repairs and materials, perhaps substantially.

Insurance costs will rise everywhere as insurers will look to spread out the damages.

I will discuss food and medical in separate reports later today.

Bogus Jobs Report

The latest jobs report is a certified mess. For discussion please see Government Employment Rose by an Amazing 785,000 in September

BLS math is often peculiar. This month is a real doozie. Four charts.

Best Wishes

Best wishes to everyone impacted by the Florida hurricanes. Damages will be huge. Anyone without both flood and wind policies will take huge hits.