Inflation is Proving to be Quite Sticky

SchiffGold US Debt Inflation

Fed is not making much progress anymore


Author

Affiliation

Exploring Finance

 

Published

June 15, 2023

DOI


This article first appeared on SchiffGold.

This analysis takes the BLS inflation data and recalculates the percentage changes at the category level to get unrounded numbers. The total number ties to the BLS, but it gives more detail at the granular level.

February CPI

Below is the inflation data that has been taken from the BLS. After bottoming in October of last year at 0.08%, the monthly number has moved back up to .45% which is the second highest reading since January 2023. Energy, Shelter, and Transportation are the main culprits as shown below.

Jul 2022Jan 2023Jul 2023Jan 2024−0.50%0.00%0.50%1.00%
CommoditiesEducationEnergyFoodHousehold OpsMedical CareOtherRecreationShelterTransportationWaste MgmtSeasonally Adjusted MoM Price Increases by Weighted CategoryMoM % Price Increase.771.05.42.91.27.06.38.51.24.05.54.4.09.43.11.22.2.51.36.08.14.23.33.45-.02

Figure 1: Month Over Month Inflation

The YoY CPI has been near the low 3% range since June of last year. If you look at the chart below, you can see that the picture is not great. Back in 2022, the main driver was Energy and Commodities (e.g., used cars). While those are not pushing the CPI anymore, Energy could come back in a big way. Back in June 2022, Energy represented 3% of the 9.1% increase. If that were to repeat in Energy, the CPI would be coming in north of 6%.

Jul 2022Jan 2023Jul 2023Jan 2024−2.00%0.00%2.00%4.00%6.00%8.00%10.00%
CommoditiesEducationEnergyFoodHousehold OpsMedical CareOtherRecreationShelterTransportationWaste MgmtUnadjusted YoY Price Increases by Weighted CategoryYoY % Change7.98.68.38.69.18.68.38.27.87.26.56.4654.9433.23.73.73.33.13.43.13.1

Figure 2: Year Over Year Inflation

Unfortuantely, in the most recent month, Energy is the main driver. If this trend were to continue, the CPI would give some pretty bad prints in the months ahead.

.1.52.30-.1-.6.5.7.41.4.50.1-.1.2.1.4.4.6.5.8.4Commodities (18.8%)Education (5%)Energy (6.6%)Food (13.6%)Household Ops (1%)Medical Care (6.5%)Other (1.5%)Recreation (3.3%)Shelter (36.2%)Transportation (6.3%)Waste Mgmt (1.1%)−0.50%0.00%0.50%1.00%1.50%2.00%
CurrentTTM AvgMoM vs TTM AverageCategory (weighting %)Percentage Price Change

Figure 3: MoM vs TTM

The table below gives a more detailed breakdown of the numbers. It shows the actual figures reported by the BLS side by side with the recalculated and unrounded numbers. The weighted column shows the contribution each value makes to the aggregated number. Details can be found on the BLS Website.

Looking at the Fed Numbers

The Fed uses a different category methodology than the BLS, but the total number ties. Below shows the number as reported by the Fed. According to the Fed categories, 5 of 8 categories are above the 12 month trend.

.6.40.40-.3.21.400.2.4.1.4.2.20.1.2.2.3.3.1.2ApparelEducationFood and BeverageHousingMedical CareOtherRecreationTransportation0.00%0.50%1.00%
1 Month12 Month Avg20 Year AvgInflation comparing current to historical (source Fed)Fed CategoryPercentage Price Change

Figure 4: Current vs History

Historical Perspective

Below is a much longer view of inflation and interest rates from the Fed and BLS (at the aggregate level, the data is the same).

195019601970198019902000201020200.0%5.0%10.0%15.0%20.0%
FedBLS RecalcBLS ActualFed Funds RateAggregate YoY CPI (source Federal Reserve)YoY CPI

Figure 5: Fed CPI

The BLS categorical data can be seen below. Again, this does not look like a wave that is ready to drop to 3% anytime soon. It looks more like a drop before another increase.

201420162018202020222024−2.0%0.0%2.0%4.0%6.0%8.0%
CommoditiesEducationEnergyFoodHousehold OpsMedical CareOtherRecreationShelterTransportationWaste MgmtCPI YoY Unadjusted Recalcuated back to 2012YoY Percentage Price Change

Figure 6: Historical CPI


Data Source: https://www.bls.gov/cpi/ and https://fred.stlouisfed.org/series/CPIAUCSL

Data Updated: Monthly within first 10 business days

Last Updated: Feb 2024

Interactive charts and graphs can always be found on the Exploring Finance dashboard: https://exploringfinance.shinyapps.io/USDebt/