Keeping you up to date on the latest data releases.
The headline CPI jumped up at an annualized rate of 7.5 percent in August, its largest monthly increase since June 2009, pushing its 12-month growth rate up from 1.4 to 1.7 percent. However, as noted in the release, roughly 80 percent of this overall increase was due to spiking gasoline prices. Elsewhere, there were some distinct signs of softness in the market basket, though there’s some disagreement between different measures of underlying inflation on how much. Excluding food and energy prices, the “core” CPI rose a mere 0.6 percent in August, slowing from a 1.1 percent increase in July and a 2.5 percent increase in June. Over the past 3 months, the core CPI is up just 1.4 percent, moderately softer than its 12-month growth rate of 1.9 percent. Alternative underlying inflation measures—the median CPI and 16 percent trimmed-mean CPI—came in much higher than the core CPI in August. The median CPI rose 2.8 percent, while the trim was up 2.0 percent in August.
As was the case last month, the rents (OER and rent of primary residence) are on the upswing, and given their enormous size (roughly 30 percent) relative to the rest of the market basket, are making it harder to disentangle the inflationary signal from noise. Rent of primary residence rose 2.3 percent in August and OER jumped up 3.1 percent (its largest monthly increase since late 2008). Even though we use the regional OER components to calculate the median CPI, given their still sizeable weight and relatively slow-moving nature, they are frequently the median component (five out of the eights months of this year so far). It appears to be a major contributor to the reason the year-over-year growth rate in the median CPI is still hanging in at 2.3 percent. The 12-month growth rate in the trimmed-mean CPI actually nudged down to 1.9 percent in August, in line with the core CPI.
After stripping away shelter prices from the core CPI, the index actually declined in August, slipping down 0.8 percent, its first decrease since late 2008. Echoing some of this disinflationary signal, the sticky CPI increased 1.6 percent in August, though after excluding shelter prices rose just 0.6 percent. Both the sticky CPI and sticky CPI ex shelter are up 2.2 percent over the past year, which is slightly below their respectively longer-run (10 year) averages. On the other hand, there was some evidence of a seasonal adjustment issue in another “sticky” priced component—education services—that may be pulling down these exclusionary core measures a little too far. The price index for education services (which comprises roughly 3.0 percent of the overall index, but that gets amplified when you exclude food, energy, and shelter components) fell 1.8 percent in August on the heels of a sharp 6.8 percent increase in July--a pattern that has been repeated itself since the end of the last recession.