Skip to main content

Inflation Hits 2.6% Annual Rate

The Consumer Price Index (CPI) increased 0.6% in March, the most since August 2012, and above the consensus of 0.5%. It was led by a 5.0% jump in energy prices, the most since September 2017, while food prices were up a small 0.1%. Core CPI, which excludes energy and food, increased 0.3%, also above the consensus of 0.2%. 

Most core CPI components increased. Shelter was up 0.3%, led by a 3.8% rebound in lodging away from home. It was the biggest rise in this component since October 2005, reflecting the gradual reopening of the economy and an increase in travel and hotel stay. Car insurance prices rose 3.3%, its third consecutive gain. Used car and truck prices rose 0.5%, but new vehicle prices were flat. There were notable price gains in household furnishings and operations, recreation, and personal care. On the flip side, there were price declines in apparel and education. 

On a year-over-year basis, CPI increased 2.6%, the most since August 2018, while core CPI rose a more moderate 1.6%. Both reflect the early stages of the pandemic that depressed prices last spring. Due to the base effect in calculating annual price growth, headline CPI inflation will approach 3.5% in the next few months, while core inflation will exceed 2.0%. Although this effect should be transitory, expect reopening of the economy, a strong recovery, and ongoing shortages of raw materials and products to lead to moderately higher CPI inflation of about 2.2% at the end of this year, compared to 1.4% last year.

Economists say that inflation numbers are expected to have a kind of sticker-shock effect in the coming months because of base effects. The year-over-year numbers will appear to be large because the comparable 2020 months were at the heart of the economic shutdown.

There are also fundamental concerns, though, with supplier demand outstripping supply, as seen in the ISM numbers, heightening concerns about bottlenecks, that, and pent-up demand for services, could find its way into retail prices.

The March PPI raised some eyebrows last week. Wholesale prices jumped 1%, double expectations, while the Core PPI rose 0.7%, well above the consensus of 0.2%. The headline annual wholesale inflation rate hit 4.2%. ”This is beyond the base effects,” Allianz adviser Mohamed El-Erian said after the report. “This is something between demand pull and cost push and its something to pay attention to.” ”The ever rising cost of product procurement” is showing up in government numbers, Peter Boockvar of Bleakley Advisory Group says. “The y/o/y jump ... is more than base effect as the m/o/m numbers are up sharply too.” That said, the stock and bond markets settled down quickly after an initial reaction to the PPI report.



Labels:

Comments

Post a Comment

Thanks for the comment. Will get back to you as soon as convenient, if necessary.

Popular posts from this blog

California: A Model for the Rest of the Country, Part 2

Part 1 here . On Leaving the Golden State Guest Post by NicklethroweR . Posted on the Burning Platform. The fabled Ventura Highway is all that separates my artist loft from the beach where surfing first came to the United States. Both my balcony and front patio face the freeway at about eye level and I could easily smack a tennis ball right on to the ever busy 101. Access to the beach and boardwalk is very important to a Tourist Town such as mine and I can see one underpass from my balcony and another underpass from the patio. Further up the street are two pedestrian bridges. Both have been recently remodeled so that people can not use it to kill themselves by leaping down into traffic. The traffic, just like the spice, must flow and the elites that live here do not like to be inconvenienced as they dart about between Malibu and Santa Barbara. Another feature of living where I live would have to be the homeless, the insane and the drug addicts that wander this particular...
Post a Comment
Read more

Top Five Consumer Cyber Security FAQs

Business, technology, environmental and economic changes are a part of life, and they are coming faster all the time. All of these changes and advancements can be distracting and make us more vulnerable to cyber scams. That's why protecting your credit is a critical part of protecting yourself from cyber security threats. Security researchers have reported that hackers and scammers are using any opportunity or vulnerability to target both individuals and companies. You may have already seen these attempts in the form of fake emails or calls. Here are the top five questions Equifax ®  has received about how individuals can protect themselves from cyber security threats and help to improve your credit protection. 1. How can I better protect my credit? Check your credit reports frequently. You can get free credit reports from the nationwide credit reporting agencies (Equifax, Experian ®  and TransUnion ® ) at annualcreditreport.com. Check your credit reports frequently to closely...
Post a Comment
Read more

School Choice Passed by Texas Senate

The Texas Senate on Thursday approved a $500 million school choice bill mostly along party lines after hours of passionate debate. It will now head for consideration in the House, where members rejected similar proposals during the regular session. Senators passed Senate Bill 1 by a 18-13 vote, with one Republican joining all Democrats in voting against the measure. The bill will likely face steep resistance in the House, where Democratic members and many rural Republicans have vehemently opposed such proposals. School choice programs, also called education savings accounts or vouchers, use public money to help pay for a child’s private schooling. “We must recognize that a one-size-fits-all approach doesn't fit the needs of our diverse student population,” said Sen. Brandon Creighton, R-Conroe, who authored SB 1 and estimated the proposal could serve about 60,000 students. Texas has about 5.5 million children in public schools. Public schools have failed the American people, especi...
Post a Comment
Read more