Core CPI up most since January 1991
The BLS CPI report shows another sharp month-over-month rise, but year-over-year is a different matter.
CPI month-over month
- The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.6 percent in July on a seasonally adjusted basis, the same increase as in June.
- The gasoline index remained up sharply in July after increasing in June, accounting for about one-quarter of the monthly increase in the seasonally adjusted index of articles.
- The energy index rose 2.5 percent in July, while the gasoline index rose 5.6 percent.
- The food index fell 0.4 percent in July, with the index for food at home 1.1 percent.
- The index for all items less food and energy rose 0.6 percent in July, its biggest increase since January 1991.
- The motor car insurance index rose sharply in July, as in the previous month. The indices for shelter, communications, used cars and trucks, and medical care also increased in July, while the index for recreation fell.
CPI year over year
- The index of all items increased 1.0 percent for the 12 months ending July, a larger increase than the 0.6 percent increase for the period ending June.
- The index for all items less food and energy increased 1.6 percent in the last 12 months.
- The food index has increased 4.1 percent over the last 12 months, with the index for food at home increasing 4.6 percent.
- Despite increasing in July, the energy index has fallen 11.2 percent over the last 12 months.
Word about measurement From the BLS
Data retrieval by personal testing for the Consumer Price Index (CPI) program has been suspended since March 16, 2020. Whenever possible, data were normally collected by personal visit online or by telephone. In addition, data collection in July was affected by the temporary closure or limited operations of certain types of establishments. These factors resulted in an increase in the number of prizes considered temporarily unavailable and awarded. While the CPI program attempts to collect as much data as possible, many indices are based on smaller amounts collected than normal, and a small number of indexes that are normally published were not published this month.
Weak measure of inflation
These indices measure inflation.
They do nothing of the sort. The indices do not include house prices, only rent.
The proposed medical inflation is a joke. Anyone who buys their own medical insurance will tell you that their cost is more than the reported 5.9%.
Everyone in college has not been happy with the increasing cost of tuition and rent in college towns.
And anyone with an ounce of common sense knows that today’s stock bubble is a measure of inflation.
Focus on consumer inflation is Horribly Wrong
Stock prices are not “consumer” inflation, but realistically are house prices.
However, the Fed’s focus on consumer inflation ignores housing, while average medical costs with those on business plans and Medicare are simply wrong.
Central misguided desires of central banks to defeat routine consumer deflation are what stimulate the destructive assets that eventually collapse
Please see Historical Perspective on CPI Deflations for a BIS Study Review: How Damaged Are They?
The Fed can blame itself
I do not blame the Fed for the coronavirus and these shocks.
However, I blame the Fed for its wrong inflation tactics that blew three of the biggest economic bubbles in a row: 2000, 2007, 2020.
Mish
