ACTV - Beneath The Skin Of CPI Inflation: A Stunning Outlier Services CPI Drove Down Everything Else

2024-06-13 10:55:00 ET

Summary

• Core services CPI increased by 2.7% annualized in May from April (0.22% not annualized), the smallest increase since October 2021.
• Rent of Primary Residence CPI rose by 4.8% annualized in May from April, an acceleration from the prior month.
• Motor vehicle insurance costs have soared during the pandemic largely because used-vehicle prices have spiked, which translates into higher replacement costs.

Services are big, and that one-month outlier was massive, and it drove down Core CPI and overall CPI.

The Consumer Price Index for May, on a month-to-month basis, was pushed down by the continued sharp drop in durable goods prices, a drop in energy prices, flat food prices, and “core services” prices that rose at the smallest pace since late 2021 in a stunning whiplash-inducing outlier move, according to data from the Bureau of Labor Statistics today. So, we’ll start with that outlier because it’s so big and because core services are so big — they account for 65% of total CPI — and because that outlier drove everything else....

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