Inflation is not so easy to tame/Claims jump Hurricane Helene related?

September CPI rose .2% headline and .3% core m/o/m, both one tenth more than expected. The y/o/y gains are now 2.4% and 3.3% respectively vs 2.5% and 3.2% for headline and core. Energy prices fell 1.9% m/o/m and are down by almost 7% y/o/y. Food prices though jumped .4% m/o/m and by 2.3% y/o/y. Prices for food at home saw a rise of .4% m/o/m, though up a modest 1.3% y/o/y. Prices for food away form home were up by .3% m/o/m and 3.9% y/o/y, experiencing more of the food inflation. Regardless of how much money you make, don’t you flinch when you see a $78 steak on the menu or a $48 pasta? I do.

Service prices ex energy continues to be, and always is, where the inflation remains as prices rose .4% m/o/m and 4.7% y/o/y. After two months of declines, medical care costs rose .4% m/o/m and up by 3.3% y/o/y (never transitory in this category). Health insurance prices rose .4% m/o/m and 7.5% y/o/y, getting closer to reality. Owners’ Equivalent Rent rose .3% m/o/m as was Rent of Primary Residence. They are up 5.2% and 4.8% y/o/y respectively. Yes, real world rents are running below these trends (likely closer to 3% on a blended basis) but they never rose as much as real world rents did in 2022 and 2023. Motor vehicle insurance continues to run hot, jumping another 1.2% m/o/m and up by 16.3% y/o/y. Fixing a vehicle too became more expensive with prices up 1% m/o/m and 4.9% y/o/y. Airline fares jumped 3.2% m/o/m and up by 1.6% y/o/y. We’ve heard from many airlines that have gotten more disciplined in cutting excess capacity and Delta said that again today. Hotel prices on the other hand fell by 2.3% m/o/m but after jumping by 2% in August. They are down 3.7% y/o/y.