Headline CPI Rises Again, Core Slightly Restrained

CPI reported slightly higher than expected in September with headline gains of 0.4% and core gains of 0.2%. This is despite the fact that supply chain disruptions continue to get worse. The September gains were rounded down from 0.243% and 0.412%, respectively. On a three-digit basis, the August core gain was the lowest since January. The headline y/y CPI metric rose to 5.4%, from 5.3% in August, 5.4% in both June and July, and 5.0% in May. It was the sixth biggest gain since 2008. 

The August decline in core CPI y/y to 4.0% was sustained by 4.3% in July and 4.5% in June, respectively, and 3.8% in April. These are the five largest gains from 1991 and 1992, respectively. After a three-month climb to June, airfare and used vehicle prices both fell in September. A mixed price swing pattern was observed that saw both a significant increase in new car prices and a large drop in apparel prices. After falling by 1.5% in August, used car prices dropped by 0.7% in September.

This was after huge increases in the previous three months, which included 10.5%, 7.3%, May, and 10.0%. After solid gains of 1.2%, 1.7%, 2.0% in June, 1.6% May, and 0.5% April, new car prices rose 1.3%. This was despite continued semiconductor shortages. After a decline of -9.1% and -0.1% respectively in August and July, airfare prices dropped -6.4%.

However, there were significant gains of 2.7%, 7.0%, and 10.2% for April. After a 0.4% August increase, apparel prices dropped by 1.1%, following a flat July reading and gains of 0.7%, 1.2%, and 0.3% respectively in April and June. After May and April’s restraint, the CPI rose due to higher energy prices in September.

stock newsAD - Recover your investment losses! Haselkorn & Thibaut, P.A. is a national law firm that specializes in fighting ONLY on behalf of investors. With a 95% success rate, let us help you recover your investment losses today. Call now 1 888-628-5590 or visit InvestmentFraudLawyers.com to schedule a free consultation and learn how our experience can help you recover your investment losses. No recovery, no fee.

The headline energy prices increased 1.3% in September, 2.0% in August, 1.6% July, and 1.5% June. Prices of gasoline rose 1.2% in September, 2.8% August, 2.4% July and 2.5% June. After gains of 0.4%, 0.7%, 0.8%, June, and 0.4% respectively in April and May, food prices rose by 0.9%. After four consecutive 0.3% increases and 0.2% gains in March and April, owners’ equivalent rent increased by 0.4%. After 0.3% gains in August, July, and 0.2% gains in March, prices for medical care services fell 0.1%. This was after a flat June figure and a -0.1% May decline. It also follows a flat April figure and 0.1% rise in March. After gains of 0.1%, 0.5%, and 0.6% in August, tobacco prices increased by 0.7%.

These prices haven’t fallen since May 2020. CPI headline gains continue to trend higher despite the sharp decline in Q2 2020. The 6-month average price gain for the headline is 0.580%, while the core gains are 0.534% and 0.438% respectively. The huge trade price and PPI gains have pushed consumer prices up by a significant 2021 increase, despite capacity constraints and “base effect” limitations.

Despite worsening supply chain problems, the long-awaited moderation of gains over recent months has been encouraging. This could help to sustain firm inflation index gains in Q4. We expect December’s y/y gains to be elevated at 5.7% headline and 4.4% core. We are yet to determine if the big price increases in 2021 will increase inflation expectations for 2022. This will likely decide whether or not the 2021 inflation rise is “transitory”.

Don't miss a thing

Get free professional market insights and stock/ETF reports that contain actionable opportunities written by a former financial advisor and Capitalist who has been investing in the markets for 20+ years.

Scroll to Top