The CPI story

November headline inflation rose one tenth m/o/m while the core was up by .3% m/o/m, with the former one tenth above the estimate and the latter as expected. Versus last year, headline CPI is higher by 3.1% and the core by 4% vs 3.2% and 4% respectively in October. Energy prices kept a lid on the headline, falling by 2.3% m/o/m and by 5.4% y/o/y. Food prices at home grew by .2% m/o/m and 2.9% y/o/y. Eating out remains pricy, with full service restaurant prices up by .5% m/o/m and 4.3% y/o/y. Limited service prices were up by .4% m/o/m and 6% y/o/y. Prices ex food, energy and shelter saw a price gain of .2% m/o/m and by 2.1% y/o/y.

Breaking it down further, services inflation ex energy rose .5% m/o/m and 5.5% y/o/y, reflecting where all the inflation is currently taking place rather than on the goods side. Rents remain the reason in this calculation even though we know real life rental pricing hasn’t yet flowed thru here. Rent of Primary Residence and Owners Equivalent Rent each saw .5% m/o/m gains and by 6.7% and 6.9% y/o/y respectively. On the ground, blended rents are rising probably by 2-4%. Medical care costs jumped .6% m/o/m and higher by .2% y/o/y. We’re now getting a lift in health insurance costs flowing thru CPI after the 12 months before that saw this component down 34% y/o/y which bears no relationship to reality and has been a calculation quirk. These costs in today’s CPI rose 1.1% m/o/m for a 2^nd straight month.

Inflation remains robust when it comes to servicing one’s vehicle. Car insurance prices jumped another 1% m/o/m and by a whopping 19.2% y/o/y. Fixing a car cost you .3% more m/o/m and by 8.5% compared to last year. Traveling has gotten cheaper with airfare prices fell .4% m/o/m and by 12% y/o/y. Hotel prices fell by 1.1% m/o/m and are little changed y/o/y. Car/truck rental prices fell 2.2% m/o/m and 10.7% y/o/y.