Inflationistas Sound Alarm

The CPI rose 0.5% in January. Energy led the way, up 5.5%. Apparel rose 1.7%, shelter 0.2%.

Inquiring minds are diving into the January Consumer Price Index (CPI) report from the BLS.

For the month, the CPI jumped 0.5% but year-over-year the CPI was flat.

CPI Year-Over-Year

CPI Year-Over-Year Major Categories

CPI Components

Shelter, the largest weighted component in the CPI, helped limit the month-over-month rise.

It's curious the BLS does not consider shelter a "major category" even though it constitutes 32.8% of the CPI.

Inflationista Alarms

Spotlight Crude

The thin blue line in the above chart connects January 2017 to January 2018.

Four months from now, energy will give a big boost to the year-over-year CPI even if the price of crude remains steady.

The May 2107 close was $46.04. A jump from $46.04 to $60.81 would constitute a 32% year-over-year jump.

Crude will place increasing upward pressure on year-over-year CPI comparisons unless it takes a big dive soon.

Mike "Mish" Shedlock

Comments
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IICS
IICS

Crude oil rose 100% yoy in February 2017.

shred1
shred1

Once this bubble pops, we'll have QE4. Won't work, though.

Realist
Realist

I suspect that prices will continue to rise faster than wages, which will continue to hurt 90% of Americans. This is a constraint on gdp growth. Tariffs and restrictive trade policies will force up prices for lumber, steel, aluminum, etc. which sets the stage for further price increases down the road. The FED will respond with higher rates, which again will crimp gdp growth. Despite rosy predictions of 3% growth, I suspect 2% is the best the US will be able to accomplish.

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