CPI rundown

August CPI headline rose .6% m/o/m and by 3 tenths core with the former as expected and the latter one tenth above expectations. Versus last year, headline CPI was up 3.7% vs 3.2% in July and the core rate was higher by 4.3% vs 4.7% in the month before. A 5.6% m/o/m jump in energy prices drove the headline print while food prices were up by .2%.

Services inflation ex energy prices were up .4% m/o/m and 5.9% y/o/y as previous rental growth continues to flow thru CPI in a delayed fashion. Owners’ Equivalent Rent saw a .4% m/o/m and 7.3% y/o/y gain. Rent of Primary Residence was higher by .5% m/o/m and 7.8% y/o/y. In real life, blended rental growth is more like 3-4% and will likely decelerate further in 2024 as a lot of supply hits the market, offset by still good demand because of 7.5% mortgage rates for new home buyers. Medical care prices were up .2% m/o/m but down 1% y/o/y. Lower health insurance prices continue to flow through here, down by 3.6% m/o/m and by 34% y/o/y. There is of course nothing in real life that mimics this and again is due to calculation quirks post Covid. We are just 2 months from recycling thru this. Vehicle insurance costs continues to skyrocket, jumping 2.4% in the month alone and higher by 19% y/o/y. The price of fixing one’s car was higher by 1.1% m/o/m and 12% y/o/y. Airline fares bounced back by 4.9% in August after the recent string of notably declines but are down 13% y/o/y. Hotel prices were down by 3.6% m/o/m and continue to decelerate but up 3% y/o/y. Eating out remains expensive with prices at full service restaurants up by .2% m/o/m and 5.2% y/o/y. Limited service prices were up by .3% m/o/m and 6.7% y/o/y.