Prices Climb At Fastest Pace Since 1982… But It Could Have Been Worse
Having surged faster than expected in 7 of the last 8 months, all eyes are on this morning’s Consumer Price Index as this is the last big release ahead of next Wednesday’s Federal Reserve decision, where Deutsche Bank economists (among many others) are expecting they’ll double the pace of tapering. Chair Powell himself reinforced those expectations in recent testimony, stopping just shy of unilaterally announcing the faster taper. Crucially, he noted this CPI print and the evolution of the virus were potential roadblocks to a faster taper next week.
And sure enough, CPI printed +6.8% YoY – right as expected and the fastest rate of increase since 1982…
Core CPI – stripping out everything you spend money on every day – rose at 4.9% YoY – its highest level since 1991…
In another blow for team transitory, the drivers of inflation were increasingly broad-based, rather than just in a few categories affected by the pandemic. Under the hood, everything rose in price…
The shelter index increased 0.5 percent over the month, as the indexes for rent and owners’ equivalent rent both rose 0.4 percent; these increases were the same as in October. Nov Shelter inflation rose 3.84% Y/Y, up from 3.38% in October and Nov Rent inflation jumped 3.05% Y/Y, up from 2.70% in October. The index for lodging away from home rose 2.9 percent in November after rising 1.4 percent in October.
Vehicle indexes also continued to rise in November. The index for used cars and trucks rose 2.5 percent over the month, the same increase as in October. The index for new vehicles rose 1.1 percent in November after a 1.4-percent increase in October.
The index for household furnishings and operations increased in November, rising 0.8 percent, the same increase as in October…
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