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Wednesday, September 13, 2023

YoY Measures of Inflation: Services, Goods and Shelter

by Calculated Risk on 9/13/2023 08:55:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had mentioned earlier when services less rent of shelter was up 7.6% year-over-year.  This has fallen sharply and is now up 3.1% 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 5.4% YoY as of August 2023, down from 5.7% YoY in July.

Services less rent of shelter was up 3.1% YoY in August, down from 3.3% YoY in July.

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 -2.0% YoY as of August 2023, down from -1.4% YoY in July.

Commodities less food and energy commodities were up 0.4% YoY in August, down from 0.9% YoY in July.

Goods inflation was transitory.

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

Shelter was up 7.2% year-over-year in August, down from 7.7% in July. Housing (PCE) was up 7.8% YoY in July, down from 8.0% in June.

The BLS noted this morning: "The index for gasoline was the largest contributor to the monthly all items increase, accounting for over half of the increase. Also contributing to the August monthly increase was continued advancement in the shelter index, which rose for the 40th consecutive month."