October 13, 2021 | 09:07
U.S. Inflation .... Hot Headline, Cooler Core
Yes, I'd like a detailed breakdown of my bill.....
U.S. inflation flared back up again. Headline CPI was up 0.4%, in line with expectations, lifting the index 5.4% above year-ago levels, the fastest gain since 2008, or in 13 years. So what were the drivers?
Here's a mini list ... the big one was food.... jumping 0.9% (do we need that extra chicken wing?), which, apart from April 2020, is the biggest monthly increase in 13 years. Think cereal (+1.1%), meats (+3.3%), fruits & vegetables (+0.6%), coffee (+1.9% .... Brazil's drought?), seasonings (+1.4%), etc. Maybe I'll skip lunch today....
Energy rose 1.3%, but there are likely bigger gains coming. Housing climbed 0.6%, the most in 16 years (or since October 2005). How about cars? Used car prices fell for the second month in a row (-0.7%), but still soared 24.4% y/y. And there is still a long wait list for new vehicles.... prices for new cars rose 1.3% or 8.7% y/y, the fastest since the late 80s. See the chart below.... yes, I'm using different scales, but you need to see the big swings.
But not everything is going up. Airfares fell for the third straight month (-6.4%), clothing was down for the first time in half a year (-1.1%), and medical care was flat. So, core prices were more tame... up just 0.2%, which was better than expected and steady at 4.0% y/y, still gripping the 4 handle for the 4th month in a row.
Of course, that probably doesn't make the average person feel better. And despite the better core CPI reading this will not stop the taper train.