"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

The Required Disclosures

The information presented in this blog and its individual articles is provided for informational use only and should not be considered investment advice or an offer for a particular security. The contents reflect the views and opinions of the individual writer as of the date the article was written and do not necessarily represent the views of the individual writer on the current date. They also do not in any way, shape, or form represent the views of the Firm Never-To-Be-Named. Any such views are subject to change at any time based upon market or other conditions and The Great Redoubt and its individual writers disclaim any responsibility to update such views. These views should not be relied on as investment advice, and because investment decisions for any security are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any contributor to The Great Redoubt. Neither The Great Redoubt nor any individual author can be held responsible for any direct or incidental loss incurred by applying any of the information offered. Please consult your tax or financial advisor for additional information concerning your specific situation.

Wednesday, June 15, 2011

Consumer Price Index

Yesterday, we had a look at production cost inflation (through the PPI).  Today, it's time to consult the CPI-U and see what, if anything, has passed on to consumers.
Last month, April's CPI-U was a mixed bag of results.  It increased 0.4%, which was right in line with expectations, while core CPI-U increased 0.2% (missing expectations).  We also saw the energy index rise 2.2% and the food index rise 0.4%.  Finally, for the rolling year, CPI-U had increased 3.2%.
This month, the Econoday-surveyed analysts are suffering from a bout of rampant optimism.  They're calling for a flat 0.0% change in CPI-U, and a 0.2% increase in CPI-U.  Are they right?
The short answer:  no.
The long answer comes from the Bureau of Labor Statistics' Consumer Price Index Summary, which shows a 0.2% increase in CPI-U for the month of May[1], and a 0.3% increase in core CPI-U.  Much of the increase is attributed to increased costs for clothing, shelter, new vehicles and recreation, which offset declines in costs for airline fare, tobacco, and personal care.  The food index increased 0.4%, but the energy index decreased 1.0%(!).
All of this puts CPI-U up 3.6% for the rolling year, core CPI-U up 1.5% for the rolling year, food CPI up 3.5%, and energy CPI up 21.5%.
[1]  Not too bad, really.  Although, technically, this means that we missed expectations by (infinity - 1)%.  Feel free to ask, if you really want to see the math.  But that's an amusing technicality in any event, because we really only missed expectations by 20 basis points..

No comments:

Post a Comment