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

Thursday, August 10, 2023

YoY Measures of Inflation: Services, Goods and Shelter

by Calculated Risk on 8/10/2023 11:54:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned when services less rent of shelter was up 7.6% year-over-year.  This has fallen sharply and is now up 3.3% YoY.

Services ex-ShelterClick on graph for larger image.

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

Services were up 5.7% YoY as of July 2023, from 5.7% YoY in June.

Services less rent of shelter was up 3.3% YoY in July, up from 3.2% YoY in June.

Earlier this year, a key question was: Would services ex-shelter inflation be persistent, or would it follow a similar pattern as goods?   This is a topic I discussed 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 -1.4% YoY as of July 2023, down from -0.8% YoY in June.

Commodities less food and energy commodities were up 0.9% YoY in July, down from 1.4% YoY in June.

Goods inflation was transitory.

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

Shelter was up 7.7% year-over-year in July, down from 7.8% in June. Housing (PCE) was up 8.0% YoY in June, down from 8.3% in May.

The BLS noted this morning: "The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 percent of the increase, with the index for motor vehicle insurance also contributing."