Following yesterday's US PPI print at record highs, overnight we saw Chinese producer prices rising at their fastest pace in 26 years, and this morning's US consumer price data was expected to show yet another non-transitory surge in inflation... but the actual surge was far bigger than expected.
US Consumer prices soared 6.2% YoY in October, far higher than the +5.9% YoY expected and accelerating from September's 5.4% YoY; that was the highest print since June 1982...
Core CPI spiked to its highest since August 1991...
On a sequential basis, the 0.9% surge in CPI was driven in equal parts by reopening and non-reopening components, suggesting that the post-Covid shift to persistent inflation is picking up pace.
Higher prices for energy, shelter, food and vehicles fueled the supercharged reading and indicated inflation is broadening out beyond categories associated with reopening. After a brief reversal, Energy and Used Car costs resumed their vertical move higher ...
And used car CPI is nowhere near done rising yet...
The shelter index increased 0.5 percent over the month, as the indexes for rent and owners’ equivalent rent both rose 0.4 percent and the index for lodging away from home increased 1.4 percent.
- Oct Shelter inflation 3.48%, up from 3.16%
- Oct Rent inflation 2.70%, up from 2.43%
And the surge in owners equivalent rent inflation is anything but over...
Amusingly, according to the BLS, just two things dropped in price in October: airline fares and alcoholic beverages. We can guarantee with 100% certainty, that both are absolute lies!
Here is the BLS' commentary on inflation excl. soaring food and energy:
The index for all items less food and energy rose 0.6 percent in October as most major component indexes increased.
The shelter index increased 0.5 percent over the month, as the indexes for rent and owners’ equivalent rent both rose 0.4 percent and the index for lodging away from home increased 1.4 percent. Major vehicle indexes also rose in October. The index for used cars and trucks rose 2.5 percent after declining in August and September. The index for new vehicles rose 1.4 percent in October, its seventh consecutive monthly increase.
The medical care index increased in October, rising 0.5 percent, its largest monthly increase since May 2020. The index for hospital services rose 0.5 percent, and the index for prescription drugs advanced 0.6 percent; the index for physicians’ services was unchanged. The household furnishings and operations index rose 0.8 percent, and the recreation index increased 0.7 percent. Also rising in October were the indexes for personal care (0.6 percent), tobacco (1.9 percent), education (0.2 percent), and communication (0.1 percent).
The motor vehicle insurance index and the apparel index were both unchanged in October. The index for airline fares was one of the few to decline, falling 0.7 percent; the index for alcoholic beverages decreased 0.2 percent.
The index for all items less food and energy rose 4.6 percent over the past 12 months. Component indexes rising more include used cars and trucks (26.4 percent) and new vehicles (9.8 percent, the largest 12-month increase since the period ending May 1975). Indexes rising less than 4.6 percent include shelter (3.5 percent) and medical care (1.3 percent). Few major component indexes declined over the past year; one exception is airline fares (-4.6 percent).
Of course, food and energy prices are just vertical at this point:
- The food at home index rose 5.4 percent over the past 12 months as all of the six major grocery store food group indexes increased over the period. The index for meats, poultry, fish, and eggs increased 11.9 percent, with the index for beef rising 20.1 percent and the index for pork rising 14.1 percent, its largest 12-month increase since the period ending December 1990. The other major grocery store food group indexes also increased over the last 12 months with increases ranging from 1.8 percent (dairy and related products) to 4.5 percent (nonalcoholic beverages).
- The index for food away from home rose 5.3 percent over the last year. The index for limited service meals rose 7.1 percent over the last 12 months, and the index for full service meals rose 5.9 percent, both the largest 12-month increases in the history of the respective series. The index for food at employee sites and schools declined sharply over the past year, falling 45.4 percent.
- The energy index rose 30.0 percent over the past 12 months, its largest 12-month increase since the period ending September 2005. All the major energy component indexes increased sharply over the last 12 months. The gasoline index rose 49.6 percent over the last year, and is now at its highest level since September 2014. The fuel oil index increased sharply over the year, rising 59.1 percent. The ndex for natural gas rose 28.1 percent over the last 12 months, and the electricity index rose 6.5 percent
Both Goods and Services inflation are soaring...
And just in case you fall for the narrative that wages are rising too... to cover this... they're not! Real weekly earnings are down 1.6% YoY - in other words, The Fed's actions are destroying people's cost of living...
The gap between PPI and CPI continues to run at record highs, meaning either consumers are about to be crushed or margins are going to collapse (which is odd because margins are actually at record highs)...
The explosive inflation surge threatens to exacerbate political challenges for President Brandon as he seeks to pass a nearly $2 trillion tax-and-spending package and defend razor-thin congressional majorities in next year’s midterm elections.
So once again we ask - will a Fed Chair Brainard ever do anything to halt this completely non-transitory surge in inflation? Or do we need