Drop in Energy Disguises a Bad Inflation print

This analysis takes the BLS inflation data and recalculates the percentage changes at the category level to get unrounded numbers. The total number ties to the BLS, but it gives more detail at the granular level.

August CPI

Below is the inflation data that has been taken from the BLS. While inflation has dropped in recent periods, a significant portion of this drop is being driven by Energy.

Figure: 1 Month Over Month Inflation

The YoY CPI shows that Food, Energy, and Commodities (used cars), have all slowed in recent periods. While this is a good sign, the stickier components like Shelter, Medical Care, and Transportation remain elevated.

If inflation were to pick back up, it would immediately show up in Energy and Food first, pushing the monthly number up very quickly.

Figure: 2 Year Over Year Inflation

Looking at the individual categories relative to history, it is clear that Energy is having an outsize effect and that shelter still remains elevated at 0.43% which is 5.2% annualized rate.

Figure: 3 MoM vs TTM

The table below gives a more detailed breakdown of the numbers. It shows the actual figures reported by the BLS side by side with the recalculated and unrounded numbers. The weighted column shows the contribution each value makes to the aggregated number. Details can be found on the BLS Website.

Figure: 4 Inflation Detail

Looking at the Fed Numbers

The Fed uses a different category methodology than the BLS, but the total number ties. Below shows the number as reported by the Fed.

Figure: 5 Current vs History

Historical Perspective

Below is a much longer view of inflation and interest rates from the Fed and BLS (at the aggregate level, the data is the same).

Figure: 6 Fed CPI

The BLS categorical data can be seen below. Again, this does not look like a wave that is ready to drop to 2% anytime soon.

Figure: 7 Historical CPI

Data Source: https://www.bls.gov/cpi/ and https://fred.stlouisfed.org/series/CPIAUCSL

Data Updated: Monthly within first 10 business days

Last Updated: Aug 2024

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