After disappointing (for The Fed's inflationistas) producer prices growth yesterday, consumer prices jumped 0.4% MoM in August - the biggest spike since January. Gains were driven by soaring energy costs (offset by a big decline in vehicle prices).
Year over Year, CPI remains below The Fed's mandat at +1.9% but that is hotter than expected and the highest since April..
As the breakdown shows, the gains were largely driven by rising energy and shelter costs (and note that vehicle prices are tumbling)
The motor vehicle insurance index continued to rise, increasing 1.0 percent in August. The recreation index also increased in August, rising 0.2 percent. The medical care index rose 0.1 percent in August. The index for physicians' services advanced 0.4 percent, and the hospital services index increased 0.2 percent. The apparel index rose 0.1 percent in August, as did the indexes for alcoholic beverages and for household furnishings and operations. The index for new vehicles was unchanged in August after declining in July.
The index for airline fares, which rose 0.7 percent in July, fell 1.0 percent in August. The index for used cars and trucks continued to decline, falling 0.2 percent. The indexes for tobacco, for education, for wireless telephone services, and for personal care all declined 0.1 percent over the month
And in core inflation, the shelter index was the main contributor to the rise, increasing 0.5 percent, its largest increase since October 2005.
The rent index increased 0.4 percent, and the index for owners' equivalent rent rose 0.3 percent. The index for lodging away from home rose sharply, increasing 4.4 percent after decreasing 4.2 percent in July.
- Rent Inflation+3.9% YoY
- Shelter inflation +3.3% YoY
So great news - the cost to drive and to have a roof over your head just surged!
Still absent Food, Energy, and Shelter, consumer prices in America are rising at almost the slowest rate on record...
The market is confused...