CPI stats and thoughts

Headline CPI in September rose .4% m/o/m, one tenth above the estimate after a .6% increase in August. The core rate was higher by .3% m/o/m as anticipated after a similar rise in August. The y/o/y gains are now 3.7% headline, the same seen in the month before while the core rate was up by 4.1% y/o/y vs 4.3% in August. Energy prices were up 1.5% m/o/m after the 5.6% jump in the month before but flattish y/o/y. Food prices were up by .2% m/o/m and 3.7% y/o/y.

Services inflation ex energy were up .6% m/o/m and 5.7% y/o/y and STILL reflecting high rental increases. Owners Equivalent Rent rose .6% m/o/m and 7.1% y/o/y. Rent of Primary Residence grew by .5% m/o/m and 7.4% y/o/y. In reality, the blended rental rate increases are running 3-4% with new leases maybe 1-2% and rental rollovers at around 4-5%. Medical care costs, the other big service component, rose .2% m/o/m but down 1.4% y/o/y. The health insurance drag ends this month and the 3.5% m/o/m and 37% y/o/y decline is ONLY a statistical quirk and next month we’ll have recycled thru this bizarre calculation. You can be sure that health insurance costs are NOT down 37% y/o/y but rather higher again. Eating out continues to get more expensive, rising .4% m/o/m and 5.1% y/o/y for full service meals and by .4% m/o/m and 6.4% y/o/y limited service meals with both highly influenced by labor costs of staff. Anything related to servicing and insuring your car continues to see skyrocketing costs. Vehicle insurance prices jumped another 1.3% m/o/m and by 19% y/o/y. Vehicle maintenance prices were up by .2% after 1%+ gains in the prior months and are higher by 10.2% y/o/y. Finally, on travel, airfare prices were up by .3% m/o/m after the 4.9% in the month before but still down 13.4% y/o/y. Hotel prices jumped by 4.2% m/o/m after the 3.6% decline in August and are higher by 8% y/o/y.