Inflation Alert! The acceleration of inflation continues: CPI for all items rises 0.4% in September and rose 3.7% over the last 12 months.

September Consumer Price Index Summary
Consumer Price Index Summary

The Consumer Price Index (CPI) rose by 0.4% in September from August.

Consumer Price Index for All Urban Consumers
Source: https://fred.stlouisfed.org/series/CPIAUCSL

With month-to-month inflation continuing to grow, over the last 12 months, the all items index increased 3.7%. This is all on the heels of a red-hot August (.6% month-to-month, 3.7% year-over-year). Inflation is not slowing down!

 Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
Source: https://fred.stlouisfed.org/series/CPIAUCSL

The index for all items less food and energy, which strips out 'volatile' products like food and energy rose 4.1% percent over the last 12 months:

 Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
Source: https://fred.stlouisfed.org/series/CPIAUCSL

With the index for all items less food and energy ABOVE CPI, inflation will continue to rage:

Source

Monthly, the index for all items less food and energy for had been held down by artificial depression on health insurance cpi, but is still accelerating month-over-month:

 Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
Source: https://fred.stlouisfed.org/series/CPILFESL

Real quick, let's talk about insurance adjustments to CPI

Every year in October, there's a change made to how we measure the cost of health insurance. This change is spread out over the next 12 months. This started last October and will end this September.

Figuring out how much health insurance costs can be tricky. It's not just about how much you pay monthly (premiums) but also other costs like when you visit the doctor (co-pays) or the maximum amount you might have to pay in a year (out-of-pocket maximums). Plus, there are so many different insurance plans, and they can be different depending on where you live.

The Bureau of Labor Statistics (BLS for short) is tasked with measuring these costs, uses a special method to estimate these changes. Every fall, they adjust their numbers based on new information. They look at how much insurance companies earn and use that to make their estimates. This means that the monthly changes in health insurance costs are pretty much the same for a whole year, and then they change it up again.

Usually, this yearly change isn't a big deal. But last year, the change was massive and had some big effects (artificially pushing CPI down for health).

For the year leading up to September 2022, the way they measured the cost of health insurance was a bit off. By that September, they said health insurance costs had gone up by 28% compared to the year before, which made it seem like prices were rising really fast.

But then in October 2022, they made their yearly change, and suddenly the numbers showed that health insurance costs were dropping every month. Medical Care/Insurance making up over 6% of total CPI being reported artificially low has suppressed CPI in this category and overall.

However, as called out, this is going away. This month, BLS will make a new adjustment that will be applied to health insurance CPI for 12 months through September 2024 that will swing the other way.

Fuel prices are pushing up CPI and appear poised to keep doing so

The gasoline index increased 2.1 percent in September, following a 10.6-percent increase in the previous month. (Before seasonal adjustment, gasoline prices rose 0.6 percent in September.)

Source: https://fred.stlouisfed.org/series/CUSR0000SETB01

Gasoline accounts for about half of the total energy CPI. Note that gasoline had been negative year-over-year but flipped to 'positive', and will become bigger drivers of CPI inflation over the coming months:

Trying to show the flip by pointing it out in red
CPI for Energy, by Category MoM YoY
Overall Energy CPI 1.5% -0.5%
Gasoline 2.1% 3.0%
Utility natural gas -1.9% -19.9%
Electricity Service 1.3% 2.6%

Gasoline flipping 'positive' has potential to cause all sorts of carnage for CPI in the remainder of the year.

Services CPI by category:

Major Services without Energy Weight in CPI MoM YoY
Services without Energy 58.34% 0.5% 5.7%
Ownerโ€™s equivalent of rent 25.6% 0.6% 7.1%
Rent of primary residence 7.6% 0.6% 7.4%
Medical care services 6.33% 0.1% -2.6%
Education and communication services 4.79% 0.3% 2.5%
Food services (food away from home) 4.8% 0.4% 6.0%
Recreation services, admission, movies, concerts, sports events, satellite tv 3.1% 0.5% 6.4%
Motor vehicle insurance 2.74% 1.2% 18.9%
Other personal services (haircuts, legal services, etc.) 1.4% 0.6% 6.8%
Motor vehicle maintenance & repair 1.1% .2% 10.2%
Hotels/Motels 1.1% .7% 7.3%
Water, Sewer, Trash Collection 1.1% 0.2% 5.2%
Video and audio services, cable 1.0% 0.5% -4.4%
Airline fares 0.5% 0.3% -13.4%
Pet services 0.5% 0.7% 7.0%
Tenantsโ€™ & Household insurance 0.369% 0.9% 2.8%
Car Rental 0.1% 0% -8.6%
Postage & delivery 0.71% 0.1% 4.6%

The two CPIs for housing (โ€œshelterโ€)--over 30% of CPI weighting:

โ€œRent of primary residenceโ€ re-accelerated to +060% for September and 7.4% Year-over-year.

Ownerโ€™s equivalent of rent up 0.6% for the month and 7.1% year-over-year.

The two CPIs for housing (โ€œshelterโ€)
Source: https://fred.stlouisfed.org/series/CUUR0000SEHA

Food at home:

The CPI for โ€œfood at homeโ€ rose by 0.1% in September from August. The 2.4% year-over-year increase was the smallest in two years since August's 3.0%.

Food at home
Source: https://fred.stlouisfed.org/series/CUSR0000SAF11

While food prices have started to come down from there crazy pandemic spike, but the true insidious nature of inflation is prices never go all the way back down:

Consumer Price Index for All Urban Consumers: Food at Home
Notice how since 2021 even when it went 'down' it's never below where it originally stated?
Food at home by category MoM YoY
Overall Food at home 0.1% 2.4%
Cereal 0.4% 4.8%
Beef 0.6% 7.0%
Poultry 0.4% -0.4%
Fish -1.2% -1.5%
Eggs 0.1% -14.5%
Dairy 1.4% -2.1%
Butter 2.4% -4.0%
Fresh Fruits -0.1% 0.1%
Fresh Vegetables -0.4% -1.2%
Juice -0.4% 4.4%
Coffee 0.7% 1.6%
Fats and Oils -0.5% 2.7%
Baby Formula 2.3% 9.2%
Alcoholic beverages at home 0.8% 4.2%
Jelly gif

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