Energy is still hiding a bad inflation number
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.
Below is the inflation data that has been taken from the BLS. Energy continues to play the primary role in bringing down inflation. Shelter, which is the largest component of the inflation basked, remains elevated.
Figure 1: Month Over Month Inflation
The YoY CPI better shows the impact that Shelter is having on the overall inflation number. It is making up the majority of the 2.7% increase. In fact, 1.66% of the 2.7% is directly from Shelter.
Figure 2: Year Over Year Inflation
Looking at the individual categories relative to history, it is clear that Energy is having an outsize effect. The good news in this chart is that Shelter is trending down compared to the 12-month average.
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.
Month over Month Data (MoM) | Year over Year Data (YoY) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Category | Weighting | BLS Reported | Nov 2024 | Oct 2024 | MoM Diff | Nov 2024 | BLS Reported | Nov 2024 | Nov 2023 | YoY Diff | Nov 2024 |
Commodities | 18.4 | -0.4 | -0.41 | -0.27 | -0.14 | -0.08 | -0.6 | -0.58 | 0.05 | -0.63 | -0.12 |
Education | 5.0 | -0.3 | -0.34 | -0.20 | -0.14 | -0.02 | 1.8 | 1.78 | 1.37 | 0.41 | 0.09 |
Energy | 6.5 | -1.7 | -1.68 | -1.06 | -0.62 | -0.11 | -3.2 | -3.18 | -5.44 | 2.25 | -0.21 |
Food | 13.5 | 0.1 | 0.07 | 0.18 | -0.11 | 0.01 | 2.4 | 2.38 | 2.95 | -0.57 | 0.32 |
Medical Care | 6.5 | 0.2 | 0.22 | 0.39 | -0.17 | 0.01 | 3.7 | 3.70 | -0.88 | 4.58 | 0.24 |
Other | 1.5 | 0.4 | 0.38 | 0.27 | 0.12 | 0.01 | 4.2 | 4.17 | 6.12 | -1.94 | 0.06 |
Recreation | 3.2 | 0.7 | 0.68 | 0.62 | 0.05 | 0.02 | 3.5 | 3.51 | 4.79 | -1.27 | 0.11 |
Household Ops | 1.0 | 0.2 | 0.16 | -0.30 | 0.46 | 0.00 | 4.6 | 5.20 | 11.13 | -5.94 | 0.05 |
Shelter | 36.6 | 0.2 | 0.24 | 0.29 | -0.05 | 0.09 | 4.7 | 4.73 | 6.51 | -1.77 | 1.66 |
Transportation | 6.6 | 0.1 | 0.05 | 1.01 | -0.96 | 0.00 | 7.1 | 7.06 | 10.06 | -3.00 | 0.43 |
Waste Mgmt | 1.1 | 0.5 | 0.55 | 0.40 | 0.15 | 0.01 | 5.2 | 5.23 | 5.35 | -0.12 | 0.06 |
Total Weighted | 99.9 | 0.3 | -0.05 | 0.12 | -0.17 | 2.7 | 2.68 | 3.13 | -0.46 | ||
Data as of: Nov 2024. All values are in %. The Weight columns show the contribution after weighting.The weighted columns do not show totals because it would be redundant to the total in the recalc. Household Ops has been reported inconsistently so is not entirely reliable. | |||||||||||
The Fed uses a different category methodology than the BLS, but the total number ties. Below shows the number as reported by the Fed. It is concerning to see so many categories above the 12 month trend in this chart.
Figure 4: Current vs History
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).
Figure 5: Fed CPI
The BLS categorical data can be seen below. The stickiness of inflation is very clear to see in this chart.
Figure 6: Historical CPI
Inflation has cooled from the peak back in 2022 but it remains elevated and has shown to be pretty sticky. Not only is the Fed unable to fight inflation anymore (due to high debt levels), but they are actually going to continue cutting rates. We are stuck with the inflation that has already happened and it looks like we will have to deal with elevated inflation going forward. This should not be a surprise to anyone who understands basic economics. Perhaps that is why gold is seeing a record year… people are finally seeing the Fed is folding to inflation and has no more tricks to play.