CPI Misses After Hotel Prices Drop By Most On Record

Consumer Prices rose less than expected MoM (+0.1% vs +0.2% exp), but on a year-over-year basis, CPI surged 2.9% - the most since Dec 2011.

While housing costs rose again, as the indexes for rent and owners' equivalent rent both increase by 0.3%...

... The reason for the core miss, and the disappointing MoM print within the CPI report, was as a result of hotel and motel rates which tumbled by 3.7% in June from the previous month, the biggest decline on record and dragging down the broader index by 0.037 percentage point.

Looking further under the hood, Energy Services and Apparel prices dropped MoM, while Fuel Oil prices jumped most MoM.

Some more details from the report:

  • Apparel, one of the most volatile CPI components, fell -0.9% in this latest report. The index for airline fares also fell 0.9 percent, its third consecutive decline. The index for household furnishings and operations fell 0.1 percent, and the index for tobacco fell 0.4 percent. The index for personal care was unchanged in June.
  • The index for used cars and trucks rose 0.7 percent in June after declining in May. The new vehicles index increased 0.4 percent in June following a 0.3-percent increase in May. The index for recreation rose 0.2 percent in June, and the indexes for communication, motor vehicle insurance, education, and alcoholic beverages also increased.
  • The medical care index increased 0.4 percent in June. The hospital services index increased 0.8 percent, the index for prescription drugs rose 0.3 percent, and the physicians' services index was unchanged.

Finally, we note that today's CPI really puts the entire Treasury market complex into perspective; it's extraordinarily rare to get a negative real yield (on a spot basis) on the long bond, but we're getting awfully close.


CheapBastard CJgipper Thu, 07/12/2018 - 09:15 Permalink

I notice my usual hotel dropped from $46/night to $44/night.

I can use that savings other places.

CPI has not been accurate for 20 years or more. Been zero or near zero for last 12 years after the fed removed anything that rose in price.

In reply to by CJgipper

konadog Thu, 07/12/2018 - 09:01 Permalink

It's an artifact of the fee game, at least in part. Lower the headline rate and jack up the fees. Oh, you wanted to park your car? That will be another $50/night. No way the BLS is able to account for all of the fees.

shizzledizzle konadog Thu, 07/12/2018 - 09:11 Permalink

This! Me and the woman have two old dogs that travel with us, they are pretty much our children. Well, when shopping for a hotel I look for "pet friendly". Well last place we stayed when checking in had a sign on the counter (Pet fee $25 per animal per night). So basically this "pet friendly" hotel rates go up %35 for us and NOTHING of this was mentioned in the reservation process. I didn't tell them I had dogs and didn't get charged but still. I have no problem with a deposit to ensure that folks don't let their dogs shit and piss all over the place but I want that back when my well behaved dogs don't cause any issues. 

In reply to by konadog

Abbie Normal shizzledizzle Thu, 07/12/2018 - 19:08 Permalink

A hotel manager friend tells me there is an extra cleaning fee for pet-friendly rooms because it can take 3X as long to get the pet hair out of the room.  In some cases, it's even necessary to bring in a 3rd party cleaner to shampoo the carpet, which puts the room out of commission for at least 24 hours.

And companion pets are not recognized as a disability under the ADA, as some guests are finding out after they've made their reservation.

In reply to by shizzledizzle

Money_for_Nothing Thu, 07/12/2018 - 09:11 Permalink

"Fuel Oil prices jumped most MoM"
Diesel fuel?

US citizens have cheap vacations. Minimize hotel costs.
Foreign citizens staying home because of Trump-fear.

Anti-Trumpers are destroying their own economic base.

Quivering Lip Thu, 07/12/2018 - 09:27 Permalink

Funny, my health insurance jumps 48% in 2 years (no inflation there) but a 3.7% drop in hotel prices brings down CPI.

Does anyone believe any of these numbers? Inflation, employment, deficit. If they do they're morons.

Trump's only half a moron since he knew they were fake until he took office.



Seasmoke Thu, 07/12/2018 - 09:55 Permalink

Someone should tell Hershey Hotel about this. And then call The Floridian in Disney World. Damn those prices are ridiculously high these past 2 years I paid for our vacation.

Ron_Mexico Thu, 07/12/2018 - 10:04 Permalink

Hilarious thing is that they've built sooo many hotels/motels around here over the last 5 years or so (and still building).  Guess maybe that's why room rates are sinking.

Kprime Thu, 07/12/2018 - 10:05 Permalink

Hotel fees have been rising strictly because of government tax and fee add ons.  Hotel rates are 60% taxes.  Just like gasoline.  The hidden theft and rape continues.  And like the states with the pension fund issues, government still believes their ability to rape the citizens for more money is endless with no consequence.

Apocalypse Wow Thu, 07/12/2018 - 10:18 Permalink

It's the trade war.  People are cancelling their holidays to visit the Great Satan, specially the Canadians and this is only the beginning, wait until this winter.

You dorkmeisters Americans are so slow it is hilarious.

Lie_Detector Thu, 07/12/2018 - 11:46 Permalink

Gasoline prices are up 50% since January. What do you expect? People do not drive as much and take shorter or no vacations away from the house. Let's see 1+1=2

Warthog777 Thu, 07/12/2018 - 12:40 Permalink

Hotel/Motel prices in the CPI? You have got to be shitting me!  How is that core anything? But even if they do, they should treat Hotel/Motel prices like they do food. People can just stay in their tents along with the homeless. See, no inflation!

Ms No Thu, 07/12/2018 - 15:14 Permalink

I was seeing gas prices of about $ 3.15 while driving across the west and I have never had a more traffic free pleasant drive (five states in all).  Usually busses of Chinese and other traffic are everywhere.  I was really surprised.  It was before 4th of July too, during the week.  

Teton closed some parts of the park for "fissures and cracks" I heard also.  Maybe the quake swarm caused them.  That's approx an hour from Yellowstone.  People are pissed because they were telling them that less was shut down than what was actually the case.