In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Tuesday, March 14, 2023

YoY Measures of Inflation: Services, Goods and Shelter

by Calculated Risk on 3/14/2023 09:07:00 AM

Here a few measures of inflation:

The first graph is the one Fed Chair Powell has been mentioning.

Services ex-ShelterClick on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through February 2023.

Services were up 7.6% YoY as of February 2023, unchanged from 7.6% YoY in January.

Services less rent of shelter was up 6.9% YoY in February, down from 7.2% YoY in January.

Will services ex-shelter inflation be persistent, or will it follow a similar pattern as goods?   This is a topic I discussed yesterday in Pandemic Economics, Housing and Monetary Policy: Part 2.

Goods CPIThe second graph shows that goods prices started to increase year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Durables were at -1.8% YoY as of February 2023, down from -1.3% YoY in January.

Commodities less food and energy commodities were up 1.0% YoY in February, down from 1.3% YoY in January.

Goods inflation was transitory.

ShelterHere is a graph of the year-over-year change in shelter from the CPI report (through February) and housing from the PCE report (through January 2023)

Shelter was up 8.1% year-over-year in February, up from 7.9% in January. Housing (PCE) was up 8.0% YoY in January.

The BLS noted this morning: "The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase [in CPI]".