re: CPI comes in below estimates - July MoM unchanged, YoY 8.5% vs 8.7% estimates

Yes they’re down but inflation is still at the highest level it’s been in 41 years. It’s got about 6 more points to go before it returns to normal levels, then that would be cause to celebrate.

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What the hell grocery store are they shopping at? Gas went up in my area $.13 since last week!

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Gas is down about 15 cents nationally from last week and down 67 cents from last month
LINK /

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I think it's believable because 5.7% is still a lot of money. The median home price a year ago was $410k so a 5.7% increase is an extra $24k.

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Except that's not how they calculate it. CPI measures shelter through OER (Owners’ Equivalent Rent of residences) and rent. In other words, increases in home values aren't being directly engaged, it's essentially "what would the homeowner likely be paying in rent for this home if they were renting". Rents move far slower than home prices so when property is appreciating quickly (like it has over the last 5+ years), it skews CPI lower as OER generally comes in around 73% of the Shelter category.

LINK

Shelter went from 2.1 increase in June to -.5 in July. I find that a bit of a tough pill to swallow as, although they slowed considerably over the course of July, home sales didn't slow enough to create the inventory needed to drop prices that much (at least not across the country).

I don’t think we see price hikes continue as they were previously last year however prices aren’t going to revert back at all.

In the retail landscape, price was taken multiple times last year when it is typically only a once a year cost increase. Energy prices all cyclical and all over the place due to macro environment factors. Housing is structurally higher but the rate environment is going to soften the rising prices (albeit the cost of ownership will be substantially higher at those same prices). Rental market is interesting as this might be an area that continues rising in cost as strong demand from those who can’t pursue home ownership need a place to live. Not a new phenomenon per se but more a continuation.

In short, I think this MoM unchanged while we lap from YAG is exactly as expected and probably what the environment looks like through the end of the year. There was a tremendous amount of cost advances made in a single year and the supply world has stabilized enough that manufactures won’t be able to pass off those cost as easily with retailers going forward.

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It's hilarious to me that shelter being the largest component of CPI (33% i think) and they are reporting 5.7% YOY increase.

Is there a single person reading that who believes real estate prices and rent have only gone up 5.7%?

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Rent up 12.4% YoY
New home sale price up 19.7% YoY

but somehow the shelter portion is 5.7%. Makes sense

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Well I mean I’m not the best at math but I know 3.77 is .13 higher than 3.64 and 3.77 is what it was yesterday when I filled up.

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It's not measuring "yesterday", it measures "the average over the last month vs the average over the previous month" or "the average of lost month versus the average of that same month last year".

Nationally, the price at the pump has dropped ~.67 per gallon over the last month, but is still a solid ~.9 over where it was a year ago.

LINK

Here in BR it's down almost a full dollar over what it was a month ago (some "club" prices have it down around $3.09/gallon).

Make no mistake though, the brunt of this was demand being blunted due to the continued high prices at the pump (combined also with the rising prices of everything else), not because supply was increased to pre-COVID levels (we're still over 1M per day behind our pre-COVID refining numbers). Even though we are heading into the point of the year where demand drops, August can see an increase in demand (around 50% of the time going back to at least 2000). LINK It wouldn't shock me if that pent-up demand comes out over August, driving prices back up again (but not near the highs we saw in June and July). Also, I wouldn't doubt if there was a slight "emergency" mindset for a few months afterwards, the idea that "prices have dropped so I need to fill up while I can before they go up again".

As fuel prices drop, eventually we'll see some prices at the shelves drop. The big issue I see remaining (at least for right now) is non-gasoline/diesel fuel.

Heating oil is still extremely high. We haven't seen prices like this at this time of year since 2008.

Another is natural gas. While we aren't near the highs of the mid 00's, the rising price along with energy companies being forced to invest in the far-more-expensive-to-build-and-maintain green energies is expressing itself through higher electricity bills. This is while Biden is trying to push more EV purchases. For people living in the northern states, it's going to be an expensive winter if it's a cold one. This is before getting into the issues in Europe with Russia shutting down energy to them.

And now I'm quite a bit off-track from your original point.

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Never was a recession. Buy buy buy!!

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That Inflation Reduction Act is ALREADY working! Dark Biden is Best Biden!

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I wonder what the adjusted number will be in a month or so. Quietly put out of course

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I don’t believe CPI is updated, other than maybe on a long-term retrospective basis since CPI overstates inflation because unlike PCE and CPI-chained it doesn’t handle substitutions and some other things very well.