March CPI Higher Than Expected, Driven By 16.4% Annual Spike In Utilities, Increase In Shelter Index

Tyler Durden's picture

Following the hotter than expected PPI data, it was the turn of CPI to come in stronger than consensus had hoped for, and sure enough, moments ago the BLS reported that March consumer inflation printed higher than the expected 0.1%, coming at 0.2% for both headline and the core (excluding food and energy) components, driven mostly higher by a surge in Utility costs which soared by 7.5% M/M, and a whopping 16.4% Y/Y. Curiously, the energy services spike of 2.6% of which utilities is a part, was offset by a drop in energy commodities, mostly fuel oil, whose cost dropped 2.9% in March and by gasoline down 1.7%, and down 4.7% Y/Y.

The BLS also noted the rapid increase in the shelter price index: "Almost two-thirds of this increase was accounted for by the shelter index, which rose 0.3 percent. The indexes for rent and owners’ equivalent rent both rose 0.3 percent, while the index for lodging away from home rose 1.5 percent." Is the housing bubble - both purchase and rent - and which has already burst across much of the nation, finally being noticed by the Fed?

The only other core commodity which saw a drop in prices in March were medical care commodities, which dropped by -.3%. Everything else was higher, and solidifies the Fed's tapering bias, if not so much a confirmation that the economy is growing which as the concurrently printing Empire Fed, on a tumble in business conditions and new orders, showed is not happening. Perhaps one should be blaming the balmy spring weather in the Empire State for this particular miss.

The monthly CPI breakdown:

And the components:

And some more details from the report:



The food index rose 0.4 percent in March, the same increase as in February. Four of the six major grocery store food groups increased in March, three of them sharply. The index for meats, poultry, fish, and eggs posted the largest increase, rising 1.2 percent, the same increase as in February. The index for dairy and related products rose 1.0 percent in March, its fifth consecutive increase. The index for fruits and vegetables, which rose 1.1 percent in February, rose 0.9 percent in March. The index for fresh fruits rose 3.1 percent, while the index for fresh vegetables declined 1.6 percent. The index for cereals and bakery products rose 0.2 percent in March, while the indexes for nonalcoholic beverages and for other food at home both declined. The food at home index has risen 1.4 percent over the last year, its largest 12-month increase since August 2012. The index for meats, poultry, fish, and eggs increased the most over the span, rising 5.1 percent, while the index for nonalcoholic beverages was the only one to decline, falling 1.8 percent. The index for food away from home rose 0.3 percent in March, the same increase as in February, and has increased 2.3 percent over the last 12 months.




The energy index fell 0.1 percent in March after a 0.5 percent decline in February. The gasoline index declined 1.7 percent in March, the same decline as in February. (Before seasonal adjustment, gasoline prices rose 5.1 percent in March). The fuel oil index also declined, falling 2.9 percent after rising 4.1 percent the previous month. In contrast, the index for natural gas rose sharply, increasing 7.5 percent, its largest one-month increase since October 2005. It has increased 15.3 percent over the last three months. The electricity index also increased, rising 1.1 percent. Over the last 12 months, the energy index has increased 0.4 percent, with the natural gas index rising 16.4 percent, the electricity index increasing 5.3 percent, and the fuel oil index advancing 2.1 percent. These increases more than offset a 4.7 percent decline in the gasoline index.


All items less food and energy


The index for all items less food and energy increased 0.2 percent in March. Almost two-thirds of this increase was accounted for by the shelter index, which rose 0.3 percent. The indexes for rent and owners’ equivalent rent both rose 0.3 percent, while the index for lodging away from home rose 1.5 percent. The medical care index rose 0.2 percent in March. Among medical care components, the hospital services index increased 0.8 percent, but the index for prescription drugs fell 0.2 percent. The apparel index, which fell 0.3 percent in February, increased 0.3 percent in March. The index for used cars and trucks rose 0.4 percent, while the index for airline fares advanced 0.5 percent. The indexes for alcoholic beverages, for tobacco, and for personal care also rose in March. The index for new vehicles was unchanged in March. The recreation index declined in March, falling 0.1 percent, as did the index for household furnishings and operations.


The index for all items less food and energy has risen 1.7 percent over the last 12 months. The shelter index has risen 2.7 percent over the last 12 months;  this is the largest 12-month increase since the period ending March 2008. Several components have increased only slightly over the last year, including   apparel (0.5 percent), recreation (0.3 percent), new vehicles (0.2 percent), and used cars and trucks (0.1 percent).

Don't expect the shelter index, most of which is rent-driven and which now has an upward momentum of its own, to moderate any time soon.

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LawsofPhysics's picture

looks like the ony thing that matters (calories) is getting considerably more expensive.

Without energy available for consumption, you don't actually do shit.

Kaiser Sousa's picture

this is bad for Gold and Silver - right?



just askin...

sodbuster's picture

The only thing I want to know is.......what does Gartman think?

GetZeeGold's picture



Energy prices will necessarily rise - Dear Leader (no...not Valerie Jarrett...the other one)

gmrpeabody's picture

Well, at least gold and silver are more affordable today...,

if nothing else.

max2205's picture

We are all Venezuelans now

Lord Koos's picture

Of course heating oil is down -- it's springtime.

TammanyBrawl's picture

Hyperinflation bitches!!

NoDebt's picture

Easy, friend.  Easy.  Just chill.  It's coming, but not yet.

TammanyBrawl's picture

but seriously folks, the Fed is screwed. Raise rates to manage the inflation and watch the market bubble pop, manufacturing (such as it is) slow, and consumer confidence slump. On the other hand, if they do nothing, the downturn in gold will be shortlived.

NoDebt's picture

Well, thank God we finally have some inflation going on, because it was obviously way too low the last 5 years.  We should all send Ben Bernanke a thank-you letter.

intric8's picture

Yellens personal inflation target is $15 for a gallon of orange juice, $10 for a gallon of milk and a buck an egg ($12 a dozen), and then everything is A-Ok and were on track for a recovery. She still has to find ways to devalue the dollar just a tad bit more, but thank heavens her isrealite predecessors 'easy' Al and 'copter' Ben have done a smashing job thus far. We get our 2% raises while the keynesians are sadistically ecstatic, because nominal wages are being kept constant, and they get to pat themselves on the back for keeping the big boogeyman deflation at bay

nickels's picture

The Fed has managed to keep house prices up (which is so good for everybody) but at the same time the shelter index has risen ( which is so bad for everybody). Ouroboros rules.

GeezerGeek's picture

High house prices are good for those planning on selling. They're also good for those imposing real estate taxes. Given a choice, I'd rather see housing prices remain uniformly low, but then again, I own and am not planning on selling any time soon.

AdvancingTime's picture

All the money that has poured into intangible products and goods may come back to haunt us. I contend this is the primary reason that inflation has not raised its ugly head. Bottom-line much of what happens in our economic future depends on inflation or deflation. The modern economy that has evolved over the last several decades is loaded with interwoven contracts reeking of contagion. If  faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar.

Like many people I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply. The timetable on which events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. The article below delves into how and why inflation may bring economic chaos.

LawsofPhysics's picture

Please, don't overthink this. 

In all of recorded history, no society/currency has ever collapsed/died because their purchasing power was too strong.

Hedge accordingly.

Dr. Engali's picture

<---------- Gas prices went up in your area in March

<---------- Gas prices went down in your are during March.


We saw a big jump in fuel prices here in March, and the just took another big jump beginning in April.

NoDebt's picture

I doubt you need a poll to find the answer to that question.  They went up EVERYWHERE.  And by a noticable amount.

Whoever it was that first decided to exclude "volatile food and energy prices" from CPI calculations was a genius.

Dr. Engali's picture

According to the report it went down 1.7% crazy how the numbers don't line up with the facts.

John Law Lives's picture

This is a useful tool to illustrate current gasoline prices throughout CONUS:

venturen's picture

<===== Inflation of printed dollar wins?

<===== Deflation of zero percent interest wins?

or just Wall Street breaks the financial system...again?

Tabarnaque's picture

Yep. But in the new normal that means that gold has to be smashed down by more than 2%.

Son of Loki's picture

Anyone see the 'new' size of Wendy's frosty ice cream? It's about 30% of what it used to be five years ago.


And, yeah, those gas prices skyrocketed over 40 cents where I live...yet not a peep out of the media.



Smegley Wanxalot's picture

Was thinking the same about gas.  It went DOWN from Feb to March?  WHERE?  It's gone up 10% here since Feb!

At least make your lies semi-believable, you fuckin bureaucrats.


(never had a Wendy's ice cream so I can't speak for that)

Lord Koos's picture

Really, you eat at Wendy's?

101 years and counting's picture

i'm paying 10-15% more this month for beef, pork and milk than just 2 months ago.  gas is over $4 in chicago and up 15% from Feb.  leave it to BLS to make shit up.  inflation is soaring.  can the fat cow at the Fed "kill inflation in 15 minutes"? A: yes.  stop the printers tomorrow.  only problem: stocks drop 10% in 1 day.

LawsofPhysics's picture

Unfortunately, you still believe in "money".  Money is irrelevant, calories (energy) available for consumption is all that matters and the demand for energy required to maintain a high standard of living has never been higher (7+ billion and growing).

John Law Lives's picture

According to this tool, Chicago and much of California are seeing gasoline prices around $4:

pods's picture

Product deflation is almost at the point where you have to buy two of things now when you used to buy 1.

The long slow grind down is not going well. 


Smegley Wanxalot's picture

Breakfast cereal boxes are about to breach the 10 ounce mark in their downsizing.  Gotta love those stupid 1.5 quart ice cream tubs - I refuse to buy any of those.  They shrank those fucking things and lost 100% of my business. I'd prefer they just raise the price than offer smaller containers, or containers that are "packed more loosely."

It's actually more environmentally sound to not shrink the containers. People need the product, but are now creating more garbage.

PlusTic's picture

Force food, heating and shelter costs up so the disappearing (middle) class is forced into debt to exist...then they have them fully by the balls...all designed as planned

yogibear's picture

The Federal Reserve's ace card is massive inflation, in the mean time the government stats will keep issuing a 1 to 2% BS number so they don't have to issue entitlement CPI increases.

Like boiling the frog slowly.

q99x2's picture

Don't buy anything and the prices will come down.

madcows's picture

Don't buy food?  Don't buy gas?  Don't pay rent?  Don't go to the Dr?

People can pass on the non-essentials, and their price will fall, a la iPads.  But they have to eat and get to work and pay rent.  That's where the inflation is.

NoWayJose's picture

My gasoline went up 30 cents in March. Where did it drop 1.7% except in the made-up land of government computers?

Jim B's picture

I hate the EPA.... Our utility is asking for the 2nd large rate increase in 3 years because they are being forced to close their coal generation plant!  F the EPA!!!! No inflation here bitchez!

GeezerGeek's picture

Obama announced quite clearly several years ago, that he intended to put the coal industry out of business. The EPA is a useful tool for such endeavors, not to mention it's a great tool to confiscate grazing lands so Harry Reid and Family can get richer building solar farms with the Chinese.

Unfortunately, so many of those complaining about high prices never associate the prices with the scoundrels they vote for. (And even if they voted against such actions, courts would simply mandate the same results.)

The USSA is teetering on the brink. FORWARD!

swmnguy's picture

Here in Minneapolis, the local electric utility (Xcel) and the local gas utility (CenterPoint) are asking for rate hikes, but not on the actual cost of energy.  They're asking to boost the "connection fees" and various service charges.  As the price of natural gas stays low, and as conservation and efficiency decrease electrical demand, they're shifting their revenue expectations to the base fees that you have to pay regardless of usage. 

Xcel (electric) said in their most recent filing that if they don't get the fee increases, they won't be able to pay their shareholders the 10.3% annual return they require.  The administrative judge who makes these decisions in MN is suggesting a 9.4% annual rate of return for shareholders and Xcel is balking at that.  I'm pulling the numbers from memory; they're very close but perhaps not dead-on.

The net impact on billpayers is supposed to be neutral over the course of a year, but that of course assumes that natural gas will stay this cheap. 

Also I believe today is the end of the cold-weather shut-off season, so a lot of people who haven't been able to pay their heating bills this winter are about to get shut off.  To get reinstated, they have to pay the balance in full, plus a hefty fee, and then I believe (not sure) they have to pre-pay about a month's worth of winter usage.  Very Ukraine/Gazprom-like.  This being Minnesota, winter heat is a pretty big deal.  Poor and old people tend to have the highest monthly bills, as they tend to have older furnaces, less-insulated homes, and keep the heat higher.  My house has a fairly new furnace and I had the house retrofitted with insulation last year, but this was a cold winter so several months I paid over $250 for natural gas.  This summer, though, my actual usage is just hot water and gas appliances, so about $20, with about $15 in fees monthly regardless of usage.

I imagine this shift to fees is widespread and will be ongoing.