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CPI Remains Stubbornly High as Yellen's "Noise" Won't Go Away

Tyler Durden's picture




 

Consumer Price Inflation was 2.1% in June (as expected) remaining above the Fed's mandate levels and worryingly for all those who see the Fed as omniscient... refusing to go "noisily" down. Core CPI fell very modestly to 1.9% year-over-year but the jump in gasoline prices accounted for two-thirds of the overall rise in June CPI (seems like the Fed needs to print some more world peace to brings prices down). How many months of 'high' inflation does it take before Yellen admits it is not 'noise'?

 

According to the BLS reports, "In contrast to the broad-based increase last month, the June seasonally adjusted increase in the all items index was primarily driven by the gasoline index. It rose 3.3 percent and accounted for two-thirds of the all items increase. Other energy indexes were mixed, with the electricity index rising, but the indexes for natural gas and fuel oil declining. The food index decelerated in June, rising only slightly, with the food at home index flat after recent increases." Supposedly this is great news for those who don't have to pay for gas. Below is the chart of gasoline CPI on a sequential basis.

Still, for those who face inflation in all its forms, the monthly price increase in June was certainly notable, and can be seen on the chart below.

 

On a year over year basis, the overall CPI remains rather "noisy":

 

Inflation broken down by its components:

Finally, the full commentary from the BLS:

Food

The food index rose 0.1 percent in June; this compares to a 0.5 percent increase in May and is its smallest monthly increase since January. The index for food at home was unchanged in June after increasing 2.2 percent over the first five months of the year. Major grocery store food groups were mixed in June. The index for dairy and related products turned down in June, falling 0.4 percent after rising in each of the previous seven months. The fruits and vegetables index also  turned down, falling 0.3 percent after a 1.1 percent increase in May. The index for cereals and bakery products fell for the second month in a row, declining 0.2 percent. In contrast to these declines, the index for meats, poultry, fish, and eggs increased in June, though its 0.2 percent increase was its smallest since  December. The index for other food at home increased 0.1 percent in June, while the index for nonalcoholic beverages was unchanged. The index for food at home has increased 2.4 percent over the past year, with the index for meats, poultry, fish, and eggs up 7.5 percent, but the indexes for nonalcoholic beverages and for cereals and bakery products both declining. The index for food away from home rose 0.2 percent in June and has risen 2.2 percent over the past 12 months.

Energy

The energy index increased 1.6 percent in June, its third increase in a row and largest since December. The gasoline index rose for the third month in a row, increasing 3.3 percent. (Before seasonal adjustment, gasoline prices increased 0.3 percent.) The electricity index also increased in June, rising 0.2 percent. In contrast, the fuel oil index fell 1.7 percent, its fourth consecutive decline. The index for natural gas also decreased, falling 2.6 percent. Over the past 12 months, the energy index has increased 3.2 percent, with its major components increasing from a low of 2.0 percent (gasoline) to a high of 5.1 percent (natural gas).

All items less food and energy

The index for all items less food and energy increased 0.1 percent in June after a 0.3 percent increase in May. The shelter index decelerated, increasing 0.2 percent in June after a 0.3 percent increase the prior month. The indexes for rent and owners’ equivalent rent repeated their May increases of 0.3 percent and 0.2 percent, respectively. However, the index for lodging away from home turned down in June, falling 1.9 percent after rising 2.0 percent in May. The apparel index rose 0.5 percent in June, its largest increase since last July. The medical care index rose 0.1 percent in June; the index for medical care services was unchanged, but the index for prescription drugs increased 1.0 percent. The index for household furnishings and operations rose 0.2 percent in June, its first increase since June 2013. The index for airline fares, which rose 5.8 percent in May, increased 0.4 percent in June. The tobacco index also rose, increasing 1.0 percent, and the recreation index advanced 0.1 percent. In contrast, the new vehicles index fell in June; its 0.3 percent decrease was its first decline since January. The index for used cars and trucks also decreased, declining 0.4 percent.

The index for all items less food and energy has risen 1.9 percent over the last 12 months; this is slightly lower than the 2.0 percent figure in May, but higher than the 1.7 percent average annualized increase over the past five years. The shelter index has increased 2.8 percent over the last 12 months, while the medical care index has risen 2.6 percent. The index for new vehicles was unchanged over the span.

 

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Tue, 07/22/2014 - 08:40 | 4987263 Squid-puppets a...
Squid-puppets a-go-go's picture

Its noise all right. It's fuckin  SCREAMING

Tue, 07/22/2014 - 08:45 | 4987283 Wolferl
Wolferl's picture

But, but, CPI high means no QE. Isn´t that bad for stawks?

Tue, 07/22/2014 - 08:47 | 4987298 Tjeff1
Tjeff1's picture

Lower than expected.  Stocks higher today.

Tue, 07/22/2014 - 08:51 | 4987309 GetZeeGold
GetZeeGold's picture

 

 

Hmmmm we're printing money and prices are going up.....not sure I'm making the connection.

 

Stocks higher today.

 

Hmmmm we're printing money and stocks are going up.....not sure I'm making the connection.

Tue, 07/22/2014 - 09:09 | 4987399 HardAssets
HardAssets's picture

Their 'numbers' are B.S.

Derivatives trader Rob Kirby's take on what's happening in the world:

http://usawatchdog.com/the-chaos-is-planned-rob-kirby/

Tue, 07/22/2014 - 09:04 | 4987379 ejmoosa
ejmoosa's picture

There is nothing bad for stocks....haven't you noticed?

Tue, 07/22/2014 - 09:41 | 4987510 Wolferl
Wolferl's picture

Oh really? So we are back at THAT point of the ever repeating history.

Tue, 07/22/2014 - 10:15 | 4987673 ejmoosa
ejmoosa's picture

The 30 companies of the DJIA made less total dollars in profit in 2013 than they did in 2012.  What happened?  Index rises 26.5%.

Bad news is good news, because things can only get better

Good news is Good news because things are better.

 

http://ejmoosa.tumblr.com/post/92434304349/heres-a-chart-of-the-profits-...  

 

I think it's more like mass hysteria.  But what do I know?

Tue, 07/22/2014 - 08:48 | 4987301 knukles
knukles's picture

So she has tinnitus. 

Tue, 07/22/2014 - 09:42 | 4987518 Cattender
Cattender's picture

Fuck.. i hate Fucking Noise.. Fuck!

Tue, 07/22/2014 - 08:40 | 4987266 TabakLover
TabakLover's picture

Core down.  Yellen lights victory cigar.  Move along folks.

Tue, 07/22/2014 - 08:50 | 4987314 Keltner Channel Surf
Keltner Channel Surf's picture

Yeah, 10YR yields fell, JPY ramped on the news.  As Sally Field might say, "I guess this means you really, really like me!"

Tue, 07/22/2014 - 09:03 | 4987375 Baby Eating Dingo22
Baby Eating Dingo22's picture

Monica's cigar finally dry out?

Tue, 07/22/2014 - 09:06 | 4987385 813kml
813kml's picture

Along with her humidor.

Tue, 07/22/2014 - 08:44 | 4987284 disabledvet
disabledvet's picture

Again...massive correction in natural gas in just the past few weeks. Also if you're driving an e-85 vehicle certainly the feedstock (corn) has gotten a lot cheaper.

Bio diesel will have a huge year this year as well as the soybean crop inside the USA will be the largest on record....which also will have a huge impact on milk prices.

Still feel like I'm getting gouged on cereal prices though.

This food catastrophe in China should be good news for the food insustry in the USA. China has a horrific inflation problem that everyone is simply glossing over.

Tue, 07/22/2014 - 08:46 | 4987294 disabledvet
disabledvet's picture

Oh, and "who can afford to drive anymore." Actual gasoline consumption inside the USA has collapsed.

Tue, 07/22/2014 - 08:51 | 4987319 knukles
knukles's picture

That's because of all the electric cars.*
*I'm just repeating the meme as spoken by those who want you to believe that everything is really fucking grand.  Granny's hemorrhoids even shrunk listening to Dear Leader.

Tue, 07/22/2014 - 10:44 | 4987806 kw2012
kw2012's picture

Interesting fact, New car sales of electric vehicles make up 0.6% of sales in the U.S.

 

Tue, 07/22/2014 - 08:45 | 4987285 Spungo
Spungo's picture

This noise is racist

Tue, 07/22/2014 - 08:45 | 4987288 divingengineer
divingengineer's picture

No problem, just strip some more shit out of the basket, it'll go down.

Trust me, it'll go down.

No, seriously, it'll go down.

Tue, 07/22/2014 - 08:47 | 4987297 1stepcloser
1stepcloser's picture

don't like the result, change the equation...

Tue, 07/22/2014 - 08:46 | 4987293 Shizzmoney
Shizzmoney's picture

RE

How many months of 'high' inflation does it take before Yellen admits it is not 'noise'?

14 mths.  These people don't really have a good history of "anticipating" things.

Tue, 07/22/2014 - 08:46 | 4987295 AdvancingTime
AdvancingTime's picture

I contend the primary reason that inflation has not raised its ugly head or become a major economic issue is because we are pouring such a large  percentage of wealth into intangible products or goods. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Like many of those who study the economy 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 economic 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 or stop driving the twenty miles to work? 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. If this happens where does it  leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years.  More in the article below.

http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....

 

Tue, 07/22/2014 - 08:48 | 4987303 Dismal Scientist
Dismal Scientist's picture

2.1% or 2% or 1.9%. It really is just noise at these absolute levels. Wouldn't fit the site meme though, so lets keep blasters on full at Yellen, eh Tylers ?

Tue, 07/22/2014 - 08:48 | 4987306 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

so why did gold go down, then suddenly pop 5 mins later?

Tue, 07/22/2014 - 09:10 | 4987402 Keltner Channel Surf
Keltner Channel Surf's picture

Someone thought they saw Bill Ackman walking toward Ft. Knox with a 140 page Power Point presentation under his arm, but it turns out it was just a local guy in a Goofy costume heading to a summer Disney parade.

Tue, 07/22/2014 - 08:51 | 4987321 whopper
whopper's picture

And these are the numbers they feed the sheeple, the real number must be double digits without their hedonic adjustments.

Tue, 07/22/2014 - 08:52 | 4987323 GrinandBearit
GrinandBearit's picture

lol at all these bullshit government numbers.

Tue, 07/22/2014 - 08:51 | 4987324 TabakLover
TabakLover's picture

Buy SP on close of 11 am 1 hour candle. Good ofr 3-10 SP points, has worked everyday for 2 weeks.

Tue, 07/22/2014 - 08:52 | 4987326 orangegeek
orangegeek's picture

CPI of 2.1%???  Really???  How about CPI of 21%??? Sounds more like it, right yellen???

 

Central banks knew exactly what they were doing when the started this POMO et al crap in 2007/2008.

 

Central banks used the down markets as an excuse/lie to provide liquidity to financial institutions to buy up everything that moves in the markets - food for the MSM to tell the world that we are all doing well.

 

Gubbermant needs inflation because the live/die on percentages - if we deflate, gubbermant cash flows tank - which is exactly where we are headed.

 

Who's buying anything but essentials in an inflated world???  Get ready for the inventory glut.

Tue, 07/22/2014 - 08:53 | 4987328 caShOnlY
caShOnlY's picture

buy stawks and save yourselves!!

Tue, 07/22/2014 - 08:55 | 4987339 TeethVillage88s
TeethVillage88s's picture

Decades ago many Americans cared about what was happening to the people in the 1980s Jobs problem.

Today I see our future in the UK with avg Household Debt $200K and avg income like $21K. We were invaded by British or European Bankers. We need to separate our American Values from those of England. The British Empire Values still exist in the UK & USA.

1) Military Republic
2) Upper Class Privilege, Lower Class Scraps
3) Foreign Conquests for Resources & Trade
4) Privateering
5) Mercenaries
6) Capitalism
7) Lip Service & Politics to substitute for Real Rights, Sovereignty, Freedom, Liberty
8) Money Rules the Law, Politics, Business, and influences foreign Leaders in support for British Trade (and US Trade today)
9) Use Corporate Structures to hide both government Actions and Corporate Profits
10) Winning is everything, Winners write history, the Ends Justify the Means
11) Leaders don't so much believe in God as we know it, but BELIEVE they Represent Gods Will OR ACT for their GOD

12) Corporate Lebensraum means that whatever is good for big corporations that need more resources and cheap labor for higher profits and more control over markets... will be accomplished even if it requires Bribe Money, Election Fixing, Exponential Federal Budget Growth, Bail-Ins, Bail-Outs, Privatizing Social Security, Covert Agents, or the US Military

13) Control over the Press, Merging of CIA with Financial Industry, and Use of Proxies for US Government & CIA Business

Tue, 07/22/2014 - 09:10 | 4987403 TabakLover
TabakLover's picture

Yes, the 99% kept happy in the UK with football and beer.  Sound familiar?

Tue, 07/22/2014 - 09:00 | 4987358 Baby Eating Dingo22
Baby Eating Dingo22's picture

NSA apparently dropping some noise into ZH site whenever I click a link

All kinds of weird messages about maintenance et al

I have never seen such a variety and frequency of "site down" messages,let alone over such a an extended period the last two weeks

Well, back to my regularly scheduled program

Tue, 07/22/2014 - 09:01 | 4987363 Tjeff1
Tjeff1's picture

 

 

 

Stocks will continue their basic uptrend until the printing stops...

The printing will not stop until meaningfull price increases make the us citizens revolt.

That will only happen (higher prices) when the dollar goes down meaningfully...

That will only happen when the world is not forced to accept our inflation.... 

That will not happen until they stop supporting the dollar....

That will not happen until the dollar is not the reserve currency...

That will not happen until there is a viable alternative to the dollar...

That will not happen until there is another internation banking cartel...

Which was just set up by the BRICS...

Tick tock...

Tue, 07/22/2014 - 09:16 | 4987421 TeethVillage88s
TeethVillage88s's picture

I'm guessing that it will be the same Banking Cartel with new Asian & South American Members. I see it as an International Treaty or Group of Agreements that become known as One Banking Agreement.

24 Countries agree to Swap Yuan or Renminbi (Bonds & Cash) with Switzerland the latest I guess. I'm thinking 3 Hubs for trading/exchaning yuan/Renminbi (Frankfurt, London, maybe Russia). And they seem to have agreement on the BRIC Development Bank (like the IMF).

What is missing? I guess just a large block of countries who agree to handle transactions in Yuan/Reminbi OR SDR OR Some other Currency.

People used to laugh at the Russian Ruble & Yuan. Brazil, India, China have lots of Debt. Swiss Franc is strong but tied to Euro right now. SDRs are from IMF or WB. What if SDRs were issued from BIS??? The idea of a UN Currency or UN Bank is Laughable which shows the difficulty in this.

Tue, 07/22/2014 - 09:01 | 4987366 Spungo
Spungo's picture

We'll be passing out trillion dollar bills to buy gas and yellen will say inflation is slightly above the 2% target

Tue, 07/22/2014 - 09:03 | 4987374 Ban KKiller
Ban KKiller's picture

Tuesday.

The accountants and their charts signal all clear! 

War is over, if you want it. Long concrete and rebar.

Tue, 07/22/2014 - 09:04 | 4987377 SilverMoneyBags
SilverMoneyBags's picture

You didn't build that noise.

Tue, 07/22/2014 - 09:10 | 4987401 overmedicatedun...
overmedicatedundersexed's picture

yr ago bacon was 2.99 today 8.00 to 7.50 $, so eat your peas..energy up, food up, meds up, junk new cars same, but liberal news talking head tells us it's not so, taxes up, RE here raised 2.5% ..and it all adds up to 2.1% sure is new math to me.

Tue, 07/22/2014 - 09:22 | 4987445 yogibear
yogibear's picture

Don't like the numbers? Change them. Now their fixed. It's been working like that for a while.

Tue, 07/22/2014 - 09:37 | 4987499 SheepDog-One
SheepDog-One's picture

2.1 my ass.

Tue, 07/22/2014 - 09:57 | 4987588 sschu
sschu's picture

Food at 2.3?  Been to a Safeway recently?

Reading the news lately has become a complete waste of time.

sschu

Tue, 07/22/2014 - 09:55 | 4987575 yogibear
yogibear's picture

It's before the November election so they have to make it look real good. The Federal Reserve is the enabler for Barry. Inflation low, stock market at all-time highs and unemployment low.

Tue, 07/22/2014 - 10:26 | 4987736 juggalo1
juggalo1's picture

The 2.1% was above mandate?  I thought the mandate was 2, which is almost precisly on target.  Core CPI of 1.9% is "below" mandate.  I need a explanation as to why the article interprets this number as "worryingly high" as opposed to "goldilocks".

Tue, 07/22/2014 - 12:19 | 4988363 Cortez
Cortez's picture

Just because the horseshit is fresh doesn't mean you should eat it.

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