- by New Deal democrat
One year ago we were in the midst of the longest government shutdown on record. As a result, there was no consumer inflation report for last October. Which means that this month is the last revenge of that shutdown - for all but a few items, there is *no* official YoY measure.
But as usual, I have a workaround that will at least enable us to estimate all YoY% changes +/-0.1%. Except as noted, the YoY growth in all items below is based on the average of last year’s September and November reports, normed to “1”. Thus, e.g, a 4% rise in headline inflation shows as “1.04.”
And what it shows is that this October was yet another “hot” month for inflation, revealing higher numbers spreading out into more areas.
With that out of the way, let’s begin. In October, consumer prices (blue) rose 0.4%, and on a YoY% basis accelerated an estimated further 0.3% to 4.0%. Core CPI excluding food and energy (red) rose 0.3% for the third month in a row, aceelerating 0.2% on an estimated YoY basis to 2.8%. Excluding shelter (gold), CPI rose 0.4%, and accelerated sharply on an estimated YoY basis from 3.5% to 4.2%:
Energy remained the main culprit, as prices rose 0.7% for the month, and were up an estimated 20.3% YoY:
There was good news and bad news for shelter, which is 1/3rd of the entire index. The good news is that it is now running significantly lower than headline inflation. The bad news is that it accelerated on a YoY basis for the second month in a row. Specifically, after rising 0.4% in September, it rose another 0.3% in October, and on an estimated YoY basis, rose another 0.1% to 3.3% YoY (blue). Of it’s two components, Owner’s equivalent rent rose 0.3% monthly and accelerated 0.2% to 3.5% estimated YoY, while actual rent of primary residence rose 0.2% and accelerated 0.1% to an estimated 2.9% YoY:
Electricity prices also continued to be a significant problem child, as prices rose a sharp 0.9%, although they only rose an estimated 3.7% YoY against very good comparisons last autumn. On an estimated YoY basis, they are higher by 20.4%:
Transportation services - mainly motor vehicle maintenance and repair, and insurance - also continued to be a problem child, up 0.6% for the month, although only an estimated 3.8% YoY:
Last month’s silver lining continued this month, as motor vehicle prices continued to be somnolent. New vehicle prices (red) rose 0.2% for the month, and were only higher 0.7% YoY, and while used vehicle prices (gold) declilned -1.2% for the month, and they were once again lower YoY by -3.3%. The average for all motor vehicles (blue) declined -0.5% monthly, and was unchanged YoY. Note that this is one category for which the source data is not from the government, and thus we have actual YoY comparisons. The below graph is normed to 100 as of just before the pandemic:
Now that we have the inflation report, tomorrow I will take a closer look at some fallout from last Friday’s employment report. Teaser: this is not going to be good for real wages and payrolls.
