CPI Comes In Hotter Than Expected On Hotel, Airline Fares; Used Car Prices Drop

The latest inflation print for the month of November came in hotter than expected, with the BLS reporting that headline and core CPI rose by 0.2%, above expectations of a modest 0.1% increase. Both prints were 0.0% in October.  The food index decreased 0.1% in Nov. after rising 0.2% in Oct, while the Energy index increased 0.4% in Nov. after rising 0.1% in Oct. The index for all items less food and energy increased 0.2 percent in November after being unchanged the prior month. The indexes for lodging away from home, household furnishings and operations, recreation, apparel, airline fares, and motor vehicle insurance all increased in November. The indexes for used cars and trucks, medical care, and new vehicles all declined over the month.

On an annual basis, headline CPI rose 1.2% while core CPI increased 1.6%, both also stronger than the expected 1.1% and 1.5%, respectively. The food index rose 3.7% over the last 12 months, while the energy index fell 9.4%t.

Broken down by components:

The food index declined 0.1 percent in November following a 0.2-percent increase in October. The index for food at home declined 0.3 percent after rising in October. Major grocery store food group indexes were mixed in November. The index for nonalcoholic beverages fell 0.9 percent in November, its largest monthly decline since December 2010. The index for other food at home fell 0.6 percent in November, and the index for cereals and bakery products decreased 0.5 percent; both indexes increased in October.

  • The food at home index increased 3.6 percent over the past 12 months. All six major grocery store food group indexes increased over the period. The largest increase was the meats, poultry, fish, and eggs index which rose 5.9 percent as the beef index increased 7.5 percent. The smallest increase was for the cereals and bakery products index, which increased 2.4 percent over the last 12 months. The index for food away from home rose 3.8 percent over the last year. The index for limited service meals rose 5.9 percent, and the index for full service meals rose 2.9 percent over the span.

The energy index rose for the sixth month in a row in November, increasing 0.4 percent. The index for natural gas rose 3.1 percent in November after declining in October. The electricity index rose 0.5 percent in November, its third consecutive monthly increase. The index for fuel oil also increased in November, rising 3.6 percent. In contrast to these increases, the gasoline index declined for the second month in a row, falling 0.4 percent.

  • The energy index fell 9.4 percent over the past 12 months. Energy commodity indexes fell sharply over the period, with the fuel oil index declining 26.4 percent and the gasoline index decreasing 19.3 percent. Energy service indexes rose over the last 12 months, with the index for natural gas increasing 4.4 percent and the index for electricity rising 1.6 percent.

The index for all items less food and energy rose 0.2 percent in November after being unchanged in October; it was driven higher by prices for lodging away from hom and airline fares as Americans took a little break from lockdowns to actually travel for once this year. The shelter index rose 0.1 percent in November, the fourth 0.1-percent increase in a row. However, the indexes for rent and owners’ equivalent rent were both unchanged in November after both rising 0.2 percent in October. The index for lodging away from home rose sharply in November, increasing 3.9 percent after falling 3.2 percent in October. The index for household furnishings and operations rose 0.7 percent in November after falling in each of the prior 2 months. The recreation index rose 0.4 percent in November; this was the same increase as last month and the fourth consecutive monthly advance. The apparel index rose 0.9 percent in November after declining in September and October. The index for airline fares rose 3.5 percent in November after increasing 6.3 percent in October. The index for motor vehicle insurance rose 1.1 percent in November after falling in September and October. The indexes for education, for alcoholic beverages, and for tobacco also increased in November.

The index for used cars and trucks fell 1.3 percent in November, its second consecutive monthly decline after sharp increases in prior months. The index for medical care declined slightly in November, falling 0.1 percent. The index for hospital services rose 0.3 percent and the index for physicians’ services rose 0.1 percent, while the index for prescription drugs declined 0.1 percent over the month. The new vehicles index declined 0.1 percent in November after rising in September and October. The used cars and trucks index increased 10.9 percent over the last 12 months and the medical care index increased 2.4 percent.

Despite the monthly increases in November, the indexes for apparel, airline fares, and motor vehicle insurance all declined over the past 12 months.

Finally, the shelter index rose 1.9 percent over the last 12 months, its smallest 12-month increase since the period ending December 2011.

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