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Tuesday, November 14, 2023

YoY Measures of Inflation: Services, Goods and Shelter

by Calculated Risk on 11/14/2023 09:21:00 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 3.0% 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 September 2023.

Services were up 5.1% YoY as of October 2023, down from 5.2% YoY in September.

Services less rent of shelter was up 3.0% YoY in October, up from 2.8% YoY in September.

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 -2.1% YoY as of October 2023, up from -2.2% YoY in September.

Commodities less food and energy commodities were unchanged YoY in October, unchanged from 0.0% YoY in September.

Goods inflation was transitory.

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

Shelter was up 6.7% year-over-year in October, down from 7.1% in September. Housing (PCE) was up 7.2% YoY in September, down from 7.4% in August.

The BLS noted this morning: "The index for shelter continued to rise in October"

Core CPI ex-shelter was up 2.0% YoY in October, up from 1.9% in September.