The Consumer Price Index came in today as expected with a jump up 0.6% month over month, while the year over year increase jumped to 3.7%, which is 0.1% higher than anticipated and 0.5% higher than last month’s. The Core CPI rose 4.3%. That’s 0.4% less than last month and in line with expectations.
Here’s quick a takeaway: Though oil is only 6% of the gross CPI, with the price per barrel being up 21% from a year ago, we’ll be expecting the headline CPI of 3.7% to rise next month as well.
Food accounts for about 14% of CPI and is the second biggest component of the Index. Like oil, food pricing is pretty volatile (and it’s also still elevated), which is why the two components are removed to calculate the Core CPI. Towering above all other categories in CPI is Shelter at 32.39%. That’s our business, and seeing as it’s most individual’s largest monthly expense, it’s the most important gauge of inflation. For CPI to come down to the Fed’s 2.0% goal, we need more affordable housing, and that’s not happening with interest rates above 7.0%.