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:
[6]
And the components:
And some more details from the report:
Food
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.
Energy
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.