CPI and Core CPI in Rare Negative Territory

Mish

Month-over-Month measures of the CPI are in negative territory.

The BLS reports consumer prices are in negative territory for the month with both the CPI and core CPI in negative territory. 

Year-over-year the CPI is up 1.4% and core CPI, which excluded food and energy is up 0.3% 

Year-Over-Year CPI 

Year-Over-Year CPI and Core CPI 2020-05

CPI Details

  • The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008.
  • A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. 
  • Food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974.
  • The index for all items less food and energy fell 0.4 percent in April, the largest monthly decline in the history of the series, which dates to 1957. 
  • The indexes for used cars and trucks and recreation also declined. 
  • The indexes for rent, owners’ equivalent rent, medical care, and household furnishings and operations all increased in April. 
  • The all items index increased 0.3 percent for the 12 months ending April, the smallest 12-month increase since October 2015. The index for all items less food and energy increased 1.4 percent over the last 12 months, its smallest increase since April 2011. 
  • The food index rose 3.5 percent over the last 12 months, its largest 12-month increase since February 2012.

Mish Personal Results

I had a photography trip that I cancelled then rescheduled for the exact same time.

  • Airline ticket dropped from $800 to $600
  • Car rental dropped from $800 to $300
  • Hotel dropped from $130 a night to $80 a night

Now is a great time to travel if you are in good health and can practice Social Distancing. The airlines require use of masks.

Mish

Comments (27)
No. 1-12
davebarnes2
davebarnes2

On the other hand, I have seen no drop in wine prices.
Ask me if care about any other prices.

Gman007
Gman007

Not interested in wine...but not happy about the 25-30% increase in food service sized ice cream buckets...

Tony Bennett
Tony Bennett

CPI down 2 months in a row.

Sounds Inflationary.

Tony Bennett
Tony Bennett

An extra dollop of "black box magic" with this report:

Coronavirus (COVID-19) Pandemic Impact on April 2020 Consumer Price Index Data

Data collection by personal visit for the Consumer Price Index (CPI) program has been suspended since March 16, 2020. When possible, data normally collected by personal visit were collected either online or by phone. Additionally, data collection in April was affected by the temporary closing or limited operations of certain types of establishments. These factors resulted in an increase in the number of prices considered temporarily unavailable and imputed. While the CPI
program attempted to collect as much data as possible, many indexes are based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published this month.

Sechel
Sechel

its temporary. oil is going back up. even if it doesn't fully recover it will contribute positively to CPI. Airline ticket prices are fake since nobody is buying any. It's not a factor this quarter in anyone's cost of living, as soon as people begin to fly just a little the prices will go back up. the airlines will ground planes to reduce excess capacity.

Sechel
Sechel

This is more meaningful. Grocery prices jumped! Expand on that. You barely touch upon it.
Everyone has to eat! Not everyone has to fly on a plane

Anda
Anda

I guess travelling within US you are not quarantined.

In Spain, UK and various other countries it is still two weeks, so very little international tourism till whenever. Ryanair is targetting 40% of its flights working for start of July, but I don't think the schedule countries are going to follow is known for more than a couple weeks ahead. I'll post

as source again because details are concise in the thread there. More questions than answers though.

Jdog1
Jdog1

Wait until the commercial RE market gets inundated with all the buildings no longer needed due to business bankruptcies. That will be the catalyst for real deflation, as debt default gets the supercharging effect of leverage.

TimeToTest
TimeToTest

They need to split things up. The CPI is just worthless.

  1. Consumption price index. (What the CPI is supposed to be)

  2. Asset price index API

  3. Care price index

  4. Would be for consumable products. Food, light bulbs, clothing, and anything else that is commonly replaced.

  5. Stocks, houses, and anything else that is used to store wealth

  6. Health insurance, college, home insurance and anything else that the median household might pay for monthly.

This is a pipe dream though because the idea behind the CPI is to hide information.

jivefive99
jivefive99

NBC News report today about food prices going uncomfortably up

k-rits
k-rits

I'm curious to hear Mish's thoughts on the inflation/deflation issue with a bit longer term horizon.

I'm on board with short term deflation, but medium/long term it's much muddier than the 2008 crisis.

Inflationary forces not present in 2008 that come into play down the road:
Trade war and de-globalization
Bankruptcies and Covid related shutdowns resulting in massive supply reductions
Government handouts on a far greater scale than 2008

At what point do those three outweigh the huge drop in demand. And do they matter enough to create more than the nominal 2% inflation?

Herkie
Herkie

US grocery costs jump the most in 46 years, led by rising prices for meat and eggs

Here it comes, they will remove fuel which is up more than 10% in the last week alone, and groceries from the CPI and my annual COLA along with millions of others will not reflect the inflation that is coming. Deja Vu the Carter years when we had 12 and 15% inflation and 1 or 2 percent raises. Lost 30-40 percent of our buying power in just a few years, and that more than anything else was why Reagan won in 1980.


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