On average, the cost of all of the stuff that we urban consumers purchase didn’t change at all last month: the headline CPI actually read 0.0%. The Consumer Price Index (CPI) covers over 200 categories of goods and services that the average American purchases on a regular basis. Number crunchers then strip out the cost of food and energy (considering these sectors to be erratic in their pricing), to give us the Core Consumer Price Index, which actually showed that it’s costing us 0.3% more to live this month than it did last month. That might not sound like much, but it’s the biggest single-month gain since June of 2011, and brings the average up 2.2% from this time last year.
Next week we see the Personal Consumption Expenditures report which uses different data to measure the same thing, and is the Fed’s favorite measure of inflation at the consumer level. These fractions of percentage points might seem insignificant (until you notice that your Café Rio burrito just went from $7.95 to $8.05), but I have discovered that ALL numbers matter when we are talking about predicting the future of interest rates.
Save your Frequent Diner Cards; they just became more valuable. And get a lower interest rate while they are still around; inflation drives rate higher.