CPI Benign but Medical Services and Rent Squeeze Continues

-edited

Consumer prices were flat in September and core CPI rose less than expected. Housing and medical services are problems.

Inquiring minds are looking at today's Consumer Price report for signs of inflation.

CPI Highlights

  • The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in September on a seasonally adjusted basis after rising 0.1 percent in August.
  • Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.
  • Increases in the indexes for shelter and food were offset by declines in the indexes for energy and used cars and trucks to result in the seasonally adjusted all items index being flat.
  • The energy index fell 1.4 percent as the gasoline index declined 2.4 percent. The food index increased 0.1 percent in September after being unchanged in each of the prior 3 months.
  • The index for all items less food and energy rose 0.1 percent in September after increasing 0.3 percent in each of the last 3 months. Along with the shelter index, the indexes for medical care, household furnishings and operations, and motor vehicle insurance all rose in September.
  • The indexes for used cars and trucks, apparel, new vehicles, and communication all declined.
  • The food index increased 1.8 percent over the last year, while the energy index decreased 4.8 percent.

CPI Month-Over-Month and Year-Over-Year

In Search of Inflation

Anyone buying their own health care insurance or electing to to have any will look at that alleged 4.4% rise and think it's a joke.

CPI vs Medical Services and OER Year-Over-Year

Owners Equivalent Rent (OER) is another problem area. Since 2012, rental prices have risen much faster than the CPI.

The cost of medical services nearly always rises faster the the CPI.

Families Suffering Despite Alleged Low Inflation

Employer Healthcare Costs Jump to $20,000 - Not Inflation?

Please note the average Employer Healthcare Costs Jumped to $20,000.

Uninsured Rate Jumps

On September 16, I reported the Percentage of Healthcare Uninsured Jumps From 8.0% in 2017 to 9.1% in 2019.

68% of Millennial Homeowners Regret Buying a Home

The BLS does not consider the price of housing as a consumer price, only rent.

Rent is outstripping wages and the price of houses even more so.

As noted in American Dream, 68% of Millennial Homeowners Regret Buying a Home.

Inflation Magic

Low inflation is imaginary for those buying their own health insurance, for those looking to buy a home, for those in college, and many others, too.

And of course the BLS does not count economic bubbles and the Fed does not even see them

Mike "Mish" Shedlock

Comments (58)
No. 1-16
Tony Bennett
Tony Bennett

"The tariffs aren't causing consumers to struggle.

Redbook yearly same store sales growth in the past 3 weeks.

August 24: 5.7% August 31: 6.5% September 7: 6.4%"

...

Yeah, well ... that is ... umm ... one of those cherry picking facts (need I say more than Kudlow used same store sales to profess the consumer well earlier this year). Moneywise.com has 8500 stores closed / announced so far this year. Coresight Research pegs year end total potentially 12000.

When you subtract so many stores boost same store sales 2 ways. 1) Chains that close their "surviving" customers will shop elsewhere and boost THAT chain's sales and 2) closing underperforming stores in still solvent chains will boost that chain's same store sales.

Give me TOTAL sales ... or don't bother.

Tony Bennett
Tony Bennett

"Rent is outstripping wages and the price of houses even more so."

...

Yes. And those who fail to realize that Housing Bubble.2 has germinated will be in for a rude awakening.

Country Bob
Country Bob

Too much of mishtalk's traffic is coming from never-do-wells who don't even live in the USA. Another large contingent are Canadian ex-pats living in the 3rd world sh!t hole known as San Fransisco.

None of these people have skin in the game. None of these people can fix there own sh!t holes -- the Canadians in SF are there because they can't get jobs back in Canada.

Mishtalk is more than 50% of the traffic on moneymaven.io ... wonder if the advertisers know how many commenters don't even live in a place where the advertiser's products are sold

Sechel
Sechel

driven by used vehicle prices

compsult
compsult

Rent/housing is grossly understated from any reasonable perspective. Health insurance has gone mad. My wife and I pay $15k for a 10K deductible HMO and I have heard worse stories. Tuition is also in the stratosphere. But you know, hedonic deflators and all. Your cell phone is cheaper, so it's all good

Stuki
Stuki

Since health care and housing are two of the most basic components of almost any household's spending, as long as those costs go up; demand for more discretionary products and services, hence their prices, will necessarily be artificially suppressed.

That's primarily what this graph shows. Generously assuming it shows anything at all of relevance, that is.

Matt3
Matt3

Healthcare costs are limiting wage growth. These costs are a big portion of an employers cost of an employee. Most employees don't know what is costs the employer. Obamacare made an already bad system even worse. Everything the government gets involved in, gets worse and costs more. I don't know what the answer is and I don't see viable alternatives

hmk
hmk

If CPI measured using same parameters prior to being changed in1996 reported inflation would be much higher. The numbers are deliberately understating true inflation. People are falling farther behind economically and don't understand what the reason is. My theory is this is why socialist ideology and politics are becoming more prominent. Communism and socialism result often because the average person is being f''d over by corrupt govts. We fit the bill exactly.

numike
numike

The Rich Really Do Pay Higher Taxes Than You By any measure, the overall U.S. tax system is progressive. By Michael R. Strain October 10, 2019, 7:30 AM CDT Bloomberg.com

Herkie
Herkie

Owners equivalent rents is a large bedrock part of the wealth inequality we see now, it is a bogus plug number that is tailored every year to Fed and Fiscal policy and does not reflect the costs of shelter or housing at all. It is a small phone survey done by calling home OWNERS and asking them if they had to rent a comparable residence in their town today what would they expect to pay.

Home OWNERS are not in the rental market, they do not know what housing costs to rent. That would be like going to a gay bar and asking the men there how much they believe baby formula costs.

I do know that my VA disability and SSD were just announced to have a 1.6% COLA adjustment for 2020, which means a raise of about $65 per month when I had a big rent increase in the current lease period, and will have another $100 per month increase starting January and I can't pay it, there is NOTHING left to cut. Jesus, even gasoline has gone up 40 cents per gallon here since the attacks on Saudi Aramco even though RBOB leaving the refinery spiked by about 14 cents for a few days and is now back below $1.60 per gallon out the door (that includes federal gas tax by the way).

Realist
Realist

It is apparent from the posts here that Health Care costs in the US are increasing far faster than the inflation rate. This is a tremendous hardship for both American citizens and American companies.

US Health Care costs are currently 18% of GDP and they are heading toward 20% over the next decade. Compare that to the 8-11% cost in most other developed countries.

Eventually (perhaps in 20 years) the US will adopt what seems to work so well in other countries. Until then, Americans will continue to pay more and more.

What puzzles me is that when I mention that there are existing systems that cost half as much as what the US pays, I get quite a few responses that tell me to F off. You would think that they would thank me for trying to help out.

Go figure.

ColoradoAccountant
ColoradoAccountant

Health care is cheap, sick care is very expensive. Here in Colorado they are building thousands of apartments within walking distance of every Light Rail station. It looks like over building to me, like in the 80s during our oil boom. Population in-flow and the millineals may sustain it now because there are no houses for sale.

Mish
Mish

Editor

"Poors getting to you Bob? By the way Mish, why is there no option to down vote repugnant posts at this site?"

I will put in a request

Was on the road most of the day

Mish
Mish

Editor

I don't write for foreigners

I write what is important or what I find interesting People are free to find other sites more to their liking.

Mish
Mish

Editor

Finally, I am pleased to have a global readership.

The title of this blog used to be Global Economic Analysis Not US economic analysis