Last month the August Consumer Price Index (CPI) Report indicated that there was no impact on inflation due to Hurricane Harvey. This month the September CPI report indicates that there is no impact on inflation due to Hurricane Irma. How true are these statements? What is causing the CPI Roller Coaster?
It must be nice to ignore food and energy costs. The number that the Federal Reserve tracks is the All items minus food and energy number. It would be great if we didn't have to eat or have electricity - we could all be like Puerto Rico - food shortages, no energy, destruction. Energy inflation from September to September was over 10%. Hospital and Related Services up 4.3%. Transportation Services up 3.9%. Shelter up 3.2%.
Shelter and Energy Costs Lead the way, Again. Where are we spending our money this year as compared to last year or 2015? First and foremost, the weighting for September of 2015 was $99.37 and $100.02 per hundred dollars to spend during September of 2015 and 2016 respectively. This year the weighting is $100.56 this year. We are spending more than 100% of every $100. Secondly, the weighting for energy went from 7.064 to 7.372 this year AND there was inflation of 10.1%. Third, the shelter weighting increased from 33.387% of our spending to 33.832%. This is getting close to the 36% "top qualifying limit" for mortgages. Your qualifying income is 28% net revolving debt, 36% with revolving debt. Inflation was 3.2%. The weighting of health insurance has increased from 0.749% to 1.019% between 2015 and 2016. That weighting has dropped to 1.001% this year? Premiums increased last year. Premiums are increasing this year and people are "spending less of their money on health insurance?"
There are a number of details that are being ignored in the report. Inflation has been low for a considerably long time. It looked as though we were going to see inflation break through 3% earlier this year. If your money usn't going as far as it was last year, you are not alone.
It's the economy.
Copyright © Jack Dunn All rights reserved.