Inflation Hotter Than Expected

So much for “transitory.” Inflation ran hotter than expected in September, according to the Bureau of Labor Statistics…(BLS)

  • Y-O-Y: The Consumer Price Index jumped up to 5.4% when compared to September 2020.
  • M-O-M: CPI was up 0.4 % in September when compared to the previous month.

NOTE: The index for all items less food and energy rose 0.2% in September and was up 4.0% year-over-year.

Food prices continue to see drastic upticks according to the September data. Prices were up 0.9% in just one month and are up 4.6% year-over-year.

  • Meats, poultry, fish, and eggs saw are now up double-digits when compared to the same time one year ago (+10.5%) and jumped 2.2% in just one month.

There was some good news in the report. If you are a fan of traveling, prices did fall for airlines and used vehicles.

  • Airline fares fell 6.4% in just one month which puts ticket prices just 0.8% higher than the same time one year ago.
  • Used car & truck prices soared at the start of spring 2021, but have now fallen in the last two months. Prices fell 0.7% from August, but are still up 24.4% when compared to the same time one year ago.

Other notable annual jumps include energy (+24.8%), new vehicles (+8.7%), Tobacco & smoking products (+6.7%) and food at restaurant(+4.7%).

TYLER’S TAKE: Shelter prices have remain relatively stable thanks to low rates and falling rents in major cities during the pandemic. However, rates are starting to move up and rents are rising even faster. This has been a concern for economists mostly because shelter makes up nearly a third of the basket for CPI inflation, and 40 percent of the basket for core CPI. The White House noted this concern last month in a report…

  • “Our analysis, however, suggests that these higher shelter prices are likely to soon show up more clearly in the monthly CPI, potentially adding several more basis points (hundredths of a percentage point) to monthly inflation than they do now.”

I have to assume that The Fed thought supply chains would normalize by the time that shelter prices started putting upward pressure on overall inflation data. It appears that didn’t happen and inflation could be here to stay for the foreseeable future.