CPI for all items rises 2.9%; shelter up

https://www.bls.gov/news.release/archives/cpi_08142024.htm

by impish9208 • 2 years ago

40 70 2 years ago

bls.gov

amosson• 2 years ago

I think the headline is incorrect. All items seem to be 2.9. 3.2 is less food and energy.

parkthomp• 2 years ago

Agreed. NYT headline reporting 2.9.

blindriver• 2 years ago

The Fed only looks at the data less food and energy because those are the most volatile.

gruez7• 2 years ago

Right, but that doesn't excuse the headline.

impish9208• 2 years ago

Yep, my bad. Fixed now.

NDizzle• 2 years ago

How does a thing called "consumer price index" exclude things like energy and food? How is that even close to honest? Friends of mine in CA with $1,000 PG&E bills. Food prices through the roof, $9 for a goldfish carton. But yeah let's exclude energy and food, because consumers - humans, don't require such things.

lotsofpulp6• 2 years ago

It doesn’t. Multiple CPI figures are provided. If you want the one that includes everything, then use that one.

Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.
The index for all items less food and energy rose 0.2 percent in July, after rising 0.1 percent the preceding month.

nightpool2• 2 years ago

The CPI inflation rate gets lower when you include food and energy, not higher. OP simply chose the higher number (3.2) for the HN headline, not the most accurate one (2.9, which includes food and energy)

hyperpape4• 2 years ago

You're half right. In a sense, food and energy should be included, but the problem is that they're much more volatile--you'd reliably have a huge surge of inflation in the US as gas gets more expensive in the summer, and deflation in the winter as prices go down. This would make it much harder to understand the numbers you were seeing.

"Core inflation is 4%, which is high" is understandable, "Inflation is -1%, but that's actually bad because it's November" is going to make communication basically impossible for non-experts.

I've always thought there ought to be a way to do some kind of damped average, so that you can detect "food has been rising in price for the past few years", but ignore "gas prices surged after memorial day", but it's hard to think through the details and find something that makes sense.

Jobs numbers work the same way, btw...we adjust for seasonal labor.

LargeWu4• 2 years ago

Food and energy are sometimes excluded because they are more volatile and susceptible to supply shocks that don't reflect underlying inflation.

kasey_junk• 2 years ago

Like all bls, fed, & dol there are multiple series that are useful for different discussions. The “headline” rate for CPI includes food and energy.

And this is a national inflation number, of course there is variance by locality. Table 4 digs into some of that variance.

LargeWu4• 2 years ago

This is the annual inflation rate. Annualized inflation of 2-3% is generally considered a modest, stable rate by economists.

ajross2• 2 years ago

The hundred year aggregate number is like 2.8% I believe

wesammikhail5• 2 years ago

Well I'm happy they consider it modest and stable because most people I know consider economists insane and unstable.

$1 in 1924 is equivalent in purchasing power to about $18.37 today, an increase of $17.37 over 100 years. The dollar had an average inflation rate of 2.95% per year between 1924 and today, producing a cumulative price increase of 1,737.28%.
This means that today's prices are 18.37 times as high as average prices since 1924, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.444% of what it could buy back then.

This is at a time where technology is making everything cheaper mind you...

hyperpape4• 2 years ago

This is at a time where technology is making everything cheaper mind you...

If this were true, then there would be no inflation.

IanCal• 2 years ago

Well you don't get paid in 1924 dollars do you?

lotsofpulp6• 2 years ago

This is at a time where technology is making everything cheaper mind you...

Automation is just one factor of supply and demand curve movements. Supply (and demand) of labor, money, energy, good weather, etc are others.

bla3• 2 years ago

That's intentional, to incentive people investing their money instead of stuffing it in their mattress, where it doesn't help anyone. As long as wages raise as well, it's not a problem. You shouldn't compare prices to prices 100 years ago, but purchasing power 100 years ago to purchasing power now.

stetrain2• 2 years ago

Why does the price of things today vs 1924 matter? Do you have a store of cash from 1924? Is there actually a downside of this steady long-term inflation?

troyvit• 2 years ago

I think an (insane and unstable) economist would say that technology is indeed making everything cheaper, and as a result the average person's buying power is increased. Since buying power has increased, demand has gone up for all goods and services, and since demand has gone up prices have risen.

yuvadam• 2 years ago

Do you consider loosing half your long term savings within 24-36 years modest and stable?

toomuchtodo• 2 years ago

I don't lose it because I invest my savings in assets that grow at a rate faster than inflation. Inflation encourages investment, vs hoarding cash with an expectation that paper is going to hold value into the future. It's just paper, it has no productive value. Currency transfers value, assets hold value.

TLDR Accumulate assets at favorable prices to invest for your future.

https://academic.oup.com/qje/article/134/3/1225/5435538

dsr_• 2 years ago

What interest rate are you assuming on savings and investments, and why is it less than the historical average?

lotsofpulp6• 2 years ago

Long term savings shouldn’t be in cash. Throw it in VT, VTI, VOO, or even a target date fund, and you’ll keep up with inflation.

ajross2• 2 years ago

Your "long term" savings is in cash? Because if it's not, it's in assets of some form or another, and assets inflate along with the rest of the economy.

dbdidksanaidbd• 2 years ago

All the sibling comments snarkily asking why you don’t invest your money is mind blowing to me. Are we all so conditioned that we can’t see the insanity behind being forced to invest the results of your labor or you’re poor? It is a tax on living that does not need to exist, and the end result is it disproportionately benefits the capital class.

Incredible how the elites have conditioned us to encourage systems that impoverish us.

jdlyga• 2 years ago

The CPI rose 2.9 percent in the year through July. It's the first time inflation is below 3% since early 2021.

infecto• 2 years ago

Change the title or remove the post. The OP injected their own feelings on a number that has been fairly consistent this year.

minkzilla• 2 years ago

    The all items index rose 2.9 percent for the 12 months ending July, the smallest 12-month increase since March 2021.

So overall good news but I think the overall effects of higher inflation are still being felt and any small price increase is pushing the limits of what people can pay.

patrulo• 2 years ago

Below expectations (3.0%), 50bps cut in September is getting more likely.

WhereIsTheTruth• 2 years ago

Prefix your title with "US: "

pfannkuchen2• 2 years ago

I don’t really understand how employment compensation is set in a medium that is intended by government policy to be decreased in value over time.

How is that not a scam?

pjkundert• 2 years ago

2-3% is the rate of inflation that has been shown, historically, to allow the monetary authorities and those close to them to transfer the wealth of the nation's public to themselves without (much) turmoil.

Any more than 2-3%, and you'd begin to notice that your children are being systematically impoverished, and revolt. Keep it at 2-3%, and you'll die before you notice, apparently.

gruez7• 2 years ago

You know about inflation, don't you? Even if you don't know about "inflation" specifically, most people of employment age would have at least heard of the concept of "prices going up". In that case I'm not sure what type of deception (ie. scam) is going on here.

pfannkuchen2• 2 years ago

Businesses obviously benefit from paying their employees less in real terms over time. This happens automatically for them due to inflation.

Do you think government can influence inflation? Do you think big business can influence government?

erickj• 2 years ago

Welcome to fiat currency backed capitalism

analyte123• 2 years ago

70% of shelter CPI is calculated by calling random homeowners up and asking them how much they think they could rent out their house for. It was switched to this in the early 80s when the Volcker shock spiked interest rates, housing payments, and CPI. Whatever you want to say about this method’s conceptual validity, it’s clearly a lagging indicator.

lotsofpulp6• 2 years ago

Wow, that is terrible. It would be trivial to track recently rented homes on Zillow or Redfin and ask the renters to use the figure on the rental contracts from those.

gruez7• 2 years ago

Rents are tracked separately, but weighted less than OER, presumably because most people own their houses. See "Rent of primary residence" and "Owners' equivalent rent of residences" in https://www.bls.gov/news.release/cpi.t02.htm

nine_zeros• 2 years ago

It is a flawed mechanism. Because homeowners are merely speculating based on Zillow or whatever.

They should really build a Kafka pipeline of actual rents from various geographies and get real data.

Spivak• 2 years ago

Or just ask RealPage what they're going to set rents to next month.

gruez7• 2 years ago

Because homeowners are merely speculating based on Zillow or whatever.

Which seems fine, because most americans own their house and aren't paying market rent. Likewise, a decent portion of americans are on rent control, which means they're not paying market rates either. Using "actual rents" (market rents?) wouldn't represent the actual expenditures for a huge portion of the population.

randomdata• 2 years ago

They do also collect actual rent data, but that is fraught with its own problems. Notably that the large majority don't rent. If you are not collecting opinions from a meaningful segment of the population, you've missed the whole reason for preparing the CPI.

Actual sale data is the best way to find out someone's opinion, but asking them what they would hypothetically pay is nearly as good if sales data is absent. What is most important is to get an opinion from a statistically wide range of people. A billionaire paying $10,000 for a loaf of bread is not indicative. You need an indicator of what most people think.

There is no perfect mechanism.

petermcneeley• 2 years ago

https://en.wikipedia.org/wiki/Goodhart%27s_law

frankbreetz• 2 years ago

>The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index.

Shelter seems to be the most tightly coupled item to interest rates. This to me seems like this will create a more hawkish fed.

I have heard some people say that higher interest rates are causing housing to go up because people aren't moving or building houses, but I don't think the fed has the same opinions. I would think the fed would not like to have a 0% interest rate for some time seeing as how it messed up the housing market for a decade.

Best case we see little to no housing appreciation over the next 10 years and that will bring us back to normal. Hopefully we don't see an appreciation like we have the last 10 years, that would not be a sustainable system and would likely further deteriorate the american dream.

Food inflation seems to be doing well, so that is encouraging.

breckenedge• 2 years ago

With Biden cutting off migration at the border, construction companies, particularly in the South, are going to have a hard time finding workers at prices that people are used to paying for labor. This will either raise the cost of new builds or delay them, leading to an even bigger shortage in supply.

hankchinaski• 2 years ago

Core CPI inflation, which excludes the index’s more volatile food and energy components, was 3.2% in July, matching estimates of 3.2% and June’s 3.2%

CPI including everything was 2.9% below estimate

CPI for all items rises 2.9%; shelter up

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