4 ms·

CPI for all items rises 2.9%; shelter up

40 points by impish9208 2y ago

infecto 2y ago
Change the title or remove the post. The OP injected their own feelings on a number that has been fairly consistent this year.
- impish9208 2y ago
  [flagged]
deleted 2y ago
[deleted]
amosson 2y ago
I think the headline is incorrect. All items seem to be 2.9. 3.2 is less food and energy.
- parkthomp 2y ago
  Agreed. NYT headline reporting 2.9.
- blindriver 2y ago
  The Fed only looks at the data less food and energy because those are the most volatile.
  - gruez 2y ago
    Right, but that doesn't excuse the headline.
- impish9208 2y ago
  Yep, my bad. Fixed now.
NDizzle 2y ago
How does a thing called "consumer price index" exclude things like energy and food? How is that even close to honest? Friends of mine in CA with $1,000 PG&E bills. Food prices through the roof, $9 for a goldfish carton. But yeah let's exclude energy and food, because consumers - humans, don't require such things.
- lotsofpulp 2y ago
  It doesn’t. Multiple CPI figures are provided. If you want the one that includes everything, then use that one. > Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment. > The index for all items less food and energy rose 0.2 percent in July, after rising 0.1 percent the preceding month.
- nightpool 2y ago
  The CPI inflation rate gets lower when you include food and energy, not higher. OP simply chose the higher number (3.2) for the HN headline, not the most accurate one (2.9, which includes food and energy)
  - hyperpape 2y ago
    You're half right. In a sense, food and energy should be included, but the problem is that they're much more volatile--you'd reliably have a huge surge of inflation in the US as gas gets more expensive in the summer, and deflation in the winter as prices go down. This would make it much harder to understand the numbers you were seeing. "Core inflation is 4%, which is high" is understandable, "Inflation is -1%, but that's actually bad because it's November" is going to make communication basically impossible for non-experts. I've always thought there ought to be a way to do some kind of damped average, so that you can detect "food has been rising in price for the past few years", but ignore "gas prices surged after memorial day", but it's hard to think through the details and find something that makes sense. Jobs numbers work the same way, btw...we adjust for seasonal labor.
    - nightpool 2y ago
LargeWu 2y ago
This is the annual inflation rate. Annualized inflation of 2-3% is generally considered a modest, stable rate by economists.
- ajross 2y ago
  The hundred year aggregate number is like 2.8% I believe
  - deleted 2y ago
    [deleted]
- wesammikhail 2y ago
  Well I'm happy they consider it modest and stable because most people I know consider economists insane and unstable. > $1 in 1924 is equivalent in purchasing power to about $18.37 today, an increase of $17.37 over 100 years. The dollar had an average inflation rate of 2.95% per year between 1924 and today, producing a cumulative price increase of 1,737.28%. > This means that today's prices are 18.37 times as high as average prices since 1924, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.444% of what it could buy back then. This is at a time where technology is making everything cheaper mind you...
  - hyperpape 2y ago
    > This is at a time where technology is making everything cheaper mind you... If this were true, then there would be no inflation.
    - wesammikhail 2y ago
      Are you seriously trying to argue that technology is adding to inflation? I'm not following...
      - stetrain 2y ago
        It doesn't make everything cheaper. The price of housing is one of the biggest drivers of cost of living in the US. The constraint on housing supply is primarily political (codes and zoning) not technological.
jdlyga 2y ago
The CPI rose 2.9 percent in the year through July. It's the first time inflation is below 3% since early 2021.
minkzilla 2y ago
The all items index rose 2.9 percent for the 12 months ending July, the smallest 12-month increase since March 2021. So overall good news but I think the overall effects of higher inflation are still being felt and any small price increase is pushing the limits of what people can pay.
patrulo 2y ago
Below expectations (3.0%), 50bps cut in September is getting more likely.
WhereIsTheTruth 2y ago
Prefix your title with "US: "
pfannkuchen 2y ago
I don’t really understand how employment compensation is set in a medium that is intended by government policy to be decreased in value over time. How is that not a scam?
- pjkundert 2y ago
  2-3% is the rate of inflation that has been shown, historically, to allow the monetary authorities and those close to them to transfer the wealth of the nation's public to themselves without (much) turmoil. Any more than 2-3%, and you'd begin to notice that your children are being systematically impoverished, and revolt. Keep it at 2-3%, and you'll die before you notice, apparently.
- gruez 2y ago
  You know about inflation, don't you? Even if you don't know about "inflation" specifically, most people of employment age would have at least heard of the concept of "prices going up". In that case I'm not sure what type of deception (ie. scam) is going on here.
  - pfannkuchen 2y ago
    Businesses obviously benefit from paying their employees less in real terms over time. This happens automatically for them due to inflation. Do you think government can influence inflation? Do you think big business can influence government?
- erickj 2y ago
  Welcome to fiat currency backed capitalism
analyte123 2y ago
70% of shelter CPI is calculated by calling random homeowners up and asking them how much they think they could rent out their house for. It was switched to this in the early 80s when the Volcker shock spiked interest rates, housing payments, and CPI. Whatever you want to say about this method’s conceptual validity, it’s clearly a lagging indicator.
- lotsofpulp 2y ago
  Wow, that is terrible. It would be trivial to track recently rented homes on Zillow or Redfin and ask the renters to use the figure on the rental contracts from those.
  - gruez 2y ago
    Rents are tracked separately, but weighted less than OER, presumably because most people own their houses. See "Rent of primary residence" and "Owners' equivalent rent of residences" in https://www.bls.gov/news.release/cpi.t02.htm https://www.bls.gov/news.release/cpi.t02.htm
- nine_zeros 2y ago
  It is a flawed mechanism. Because homeowners are merely speculating based on Zillow or whatever. They should really build a Kafka pipeline of actual rents from various geographies and get real data.
  - Spivak 2y ago
    Or just ask RealPage what they're going to set rents to next month.
  - gruez 2y ago
    >Because homeowners are merely speculating based on Zillow or whatever. Which seems fine, because most americans own their house and aren't paying market rent. Likewise, a decent portion of americans are on rent control, which means they're not paying market rates either. Using "actual rents" (market rents?) wouldn't represent the actual expenditures for a huge portion of the population.
petermcneeley 2y ago
https://en.wikipedia.org/wiki/Goodhart%27s_law https://en.wikipedia.org/wiki/Goodhart%27s_law
frankbreetz 2y ago
>>The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index. Shelter seems to be the most tightly coupled item to interest rates. This to me seems like this will create a more hawkish fed. I have heard some people say that higher interest rates are causing housing to go up because people aren't moving or building houses, but I don't think the fed has the same opinions. I would think the fed would not like to have a 0% interest rate for some time seeing as how it messed up the housing market for a decade. Best case we see little to no housing appreciation over the next 10 years and that will bring us back to normal. Hopefully we don't see an appreciation like we have the last 10 years, that would not be a sustainable system and would likely further deteriorate the american dream. Food inflation seems to be doing well, so that is encouraging.
- breckenedge 2y ago
  With Biden cutting off migration at the border, construction companies, particularly in the South, are going to have a hard time finding workers at prices that people are used to paying for labor. This will either raise the cost of new builds or delay them, leading to an even bigger shortage in supply.
  - deleted 2y ago
    [deleted]
hankchinaski 2y ago
Core CPI inflation, which excludes the index’s more volatile food and energy components, was 3.2% in July, matching estimates of 3.2% and June’s 3.2% CPI including everything was 2.9% below estimate

40 points by impish9208 2y ago

Change the title or remove the post. The OP injected their own feelings on a number that has been fairly consistent this year.

impish9208 2y ago
[flagged]

deleted 2y ago

[deleted]

amosson 2y ago

I think the headline is incorrect. All items seem to be 2.9. 3.2 is less food and energy.

parkthomp 2y ago
Agreed. NYT headline reporting 2.9.
blindriver 2y ago
The Fed only looks at the data less food and energy because those are the most volatile.
- gruez 2y ago
  Right, but that doesn't excuse the headline.
impish9208 2y ago
Yep, my bad. Fixed now.

NDizzle 2y ago

How does a thing called "consumer price index" exclude things like energy and food? How is that even close to honest? Friends of mine in CA with $1,000 PG&E bills. Food prices through the roof, $9 for a goldfish carton. But yeah let's exclude energy and food, because consumers - humans, don't require such things.

lotsofpulp 2y ago
It doesn’t. Multiple CPI figures are provided. If you want the one that includes everything, then use that one. > Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment. > The index for all items less food and energy rose 0.2 percent in July, after rising 0.1 percent the preceding month.
nightpool 2y ago
The CPI inflation rate gets lower when you include food and energy, not higher. OP simply chose the higher number (3.2) for the HN headline, not the most accurate one (2.9, which includes food and energy)
- hyperpape 2y ago
  You're half right. In a sense, food and energy should be included, but the problem is that they're much more volatile--you'd reliably have a huge surge of inflation in the US as gas gets more expensive in the summer, and deflation in the winter as prices go down. This would make it much harder to understand the numbers you were seeing. "Core inflation is 4%, which is high" is understandable, "Inflation is -1%, but that's actually bad because it's November" is going to make communication basically impossible for non-experts. I've always thought there ought to be a way to do some kind of damped average, so that you can detect "food has been rising in price for the past few years", but ignore "gas prices surged after memorial day", but it's hard to think through the details and find something that makes sense. Jobs numbers work the same way, btw...we adjust for seasonal labor.
  - nightpool 2y ago

LargeWu 2y ago

This is the annual inflation rate. Annualized inflation of 2-3% is generally considered a modest, stable rate by economists.

ajross 2y ago
The hundred year aggregate number is like 2.8% I believe
- deleted 2y ago
  [deleted]
wesammikhail 2y ago
Well I'm happy they consider it modest and stable because most people I know consider economists insane and unstable. > $1 in 1924 is equivalent in purchasing power to about $18.37 today, an increase of $17.37 over 100 years. The dollar had an average inflation rate of 2.95% per year between 1924 and today, producing a cumulative price increase of 1,737.28%. > This means that today's prices are 18.37 times as high as average prices since 1924, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.444% of what it could buy back then. This is at a time where technology is making everything cheaper mind you...
- hyperpape 2y ago
  > This is at a time where technology is making everything cheaper mind you... If this were true, then there would be no inflation.
  - wesammikhail 2y ago
    Are you seriously trying to argue that technology is adding to inflation? I'm not following...
    - stetrain 2y ago
      It doesn't make everything cheaper. The price of housing is one of the biggest drivers of cost of living in the US. The constraint on housing supply is primarily political (codes and zoning) not technological.

jdlyga 2y ago

The CPI rose 2.9 percent in the year through July. It's the first time inflation is below 3% since early 2021.

minkzilla 2y ago

The all items index rose 2.9 percent for the 12 months ending July, the smallest 12-month increase since March 2021. So overall good news but I think the overall effects of higher inflation are still being felt and any small price increase is pushing the limits of what people can pay.

patrulo 2y ago

Below expectations (3.0%), 50bps cut in September is getting more likely.

WhereIsTheTruth 2y ago

Prefix your title with "US: "

pfannkuchen 2y ago

I don’t really understand how employment compensation is set in a medium that is intended by government policy to be decreased in value over time. How is that not a scam?

pjkundert 2y ago
2-3% is the rate of inflation that has been shown, historically, to allow the monetary authorities and those close to them to transfer the wealth of the nation's public to themselves without (much) turmoil. Any more than 2-3%, and you'd begin to notice that your children are being systematically impoverished, and revolt. Keep it at 2-3%, and you'll die before you notice, apparently.
gruez 2y ago
You know about inflation, don't you? Even if you don't know about "inflation" specifically, most people of employment age would have at least heard of the concept of "prices going up". In that case I'm not sure what type of deception (ie. scam) is going on here.
- pfannkuchen 2y ago
  Businesses obviously benefit from paying their employees less in real terms over time. This happens automatically for them due to inflation. Do you think government can influence inflation? Do you think big business can influence government?
erickj 2y ago
Welcome to fiat currency backed capitalism

analyte123 2y ago

70% of shelter CPI is calculated by calling random homeowners up and asking them how much they think they could rent out their house for. It was switched to this in the early 80s when the Volcker shock spiked interest rates, housing payments, and CPI. Whatever you want to say about this method’s conceptual validity, it’s clearly a lagging indicator.

lotsofpulp 2y ago
Wow, that is terrible. It would be trivial to track recently rented homes on Zillow or Redfin and ask the renters to use the figure on the rental contracts from those.
- gruez 2y ago
  Rents are tracked separately, but weighted less than OER, presumably because most people own their houses. See "Rent of primary residence" and "Owners' equivalent rent of residences" in https://www.bls.gov/news.release/cpi.t02.htm https://www.bls.gov/news.release/cpi.t02.htm
nine_zeros 2y ago
It is a flawed mechanism. Because homeowners are merely speculating based on Zillow or whatever. They should really build a Kafka pipeline of actual rents from various geographies and get real data.
- Spivak 2y ago
  Or just ask RealPage what they're going to set rents to next month.
- gruez 2y ago
  >Because homeowners are merely speculating based on Zillow or whatever. Which seems fine, because most americans own their house and aren't paying market rent. Likewise, a decent portion of americans are on rent control, which means they're not paying market rates either. Using "actual rents" (market rents?) wouldn't represent the actual expenditures for a huge portion of the population.

petermcneeley 2y ago

https://en.wikipedia.org/wiki/Goodhart%27s_law https://en.wikipedia.org/wiki/Goodhart%27s_law

frankbreetz 2y ago

>>The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index. Shelter seems to be the most tightly coupled item to interest rates. This to me seems like this will create a more hawkish fed. I have heard some people say that higher interest rates are causing housing to go up because people aren't moving or building houses, but I don't think the fed has the same opinions. I would think the fed would not like to have a 0% interest rate for some time seeing as how it messed up the housing market for a decade. Best case we see little to no housing appreciation over the next 10 years and that will bring us back to normal. Hopefully we don't see an appreciation like we have the last 10 years, that would not be a sustainable system and would likely further deteriorate the american dream. Food inflation seems to be doing well, so that is encouraging.

breckenedge 2y ago
With Biden cutting off migration at the border, construction companies, particularly in the South, are going to have a hard time finding workers at prices that people are used to paying for labor. This will either raise the cost of new builds or delay them, leading to an even bigger shortage in supply.
- deleted 2y ago
  [deleted]

hankchinaski 2y ago

Core CPI inflation, which excludes the index’s more volatile food and energy components, was 3.2% in July, matching estimates of 3.2% and June’s 3.2% CPI including everything was 2.9% below estimate