It's inflation day, and the BLS reports that CPI spiked up to 3.7% in December on an annualized basis:
Core CPI didn't change much and ended the month at 3.8%. This is obviously not a good report, but as usual, it's a noisy series and a single month doesn't mean much.
On a conventional year-over-year basis, CPI clocked in at 3.3% and core CPI was 3.9%.
NPR was saying housing costs contributed a lot to inflation this term. A lot of Christmas sales were starting just after Halloween this year, which could make Nov. look better at expense of Dec (on a month to month basis).
The core monthly number is at .3 which fine (could be .26 or .34). Oscillating between .2 and .3 produces a 3% yearly number which is not concerning. The property cost represents half the increase which my guess is reflective of rent hikes that occur when transitioning from one year to next, the next report may be similarly impacted. The bottom line is that we need to track 3-6 months numbers to have a better feel. For what’s worth over at Calculated Risk it says YTY core excluding shelter is 2.2.
And yet, the rents (of primary residence) component of the CPI continued to decline -- https://fred.stlouisfed.org/graph/?g=1dWT5
So what's driving this CPI increase? Energy costs -- https://fred.stlouisfed.org/graph/?g=1dWTf
This is potentially misleading. Rising (and inaccurate) shelter costs accounted for much, much more (roughly 8x) of the current month inflation than did rising energy costs.
Current month inflation is almost entirely due to shelter which we know is inaccurate in that its reflecting last years shelter increases, not this months shelter increases. This has been true for the last several months.
Inflation is no longer an issue.
Aaaaaaannnnndddddddd -- wholesale prices fell. https://www.cnbc.com/2024/01/12/wholesale-prices-unexpectedly-fell-0point1percent-in-december-in-positive-inflation-sign.html
And wholesale prices also rose only 1% for 2023, while CPI went up 3.4%. Hmmmmm.
CPI is heavily weighted for housing/shelter costs, other indexes have a lower weighting or dont have any housing costs at all.
Given that housing accounts for most of the CPI inflation, this makes the different indexes wildly different.