The AIER Everyday Price Index increased by 0.6 percent in September, the tenth consecutive month of gain. Over the last 10 months, the monthly increases have been between 0.4 percent and 1.2 percent, putting the 10-month gain at 7.5 percent or an annualized pace of 9.1 percent. Including the two months prior to the run of increases, the 12-month gain is 7.2 percent, the fastest pace since September 2008.
Food at home (a.k.a. groceries) was the largest contributor to the increase in the Everyday Price Index in September, contributing 24 basis points to the gain. Combined with a 10 basis-point contribution from food away from home (a.k.a.) restaurants, food categories added 34 basis points or about 60 percent of the total monthly rise. Household energy was the other significant contributor to the September increase, adding 11 basis points while motor fuel added 4 basis points. Combined food and energy categories accounted for 90 percent of the monthly gain in September.
The Everyday Price Index including apparel, a broader measure that includes clothing and shoes, rose 0.7 percent, also the tenth consecutive increase. Over the past year, the Everyday Price Index including apparel is up 6.9 percent, the fifth month in a row above 6 percent. Apparel prices jumped 1.8 percent on a not-seasonally-adjusted basis in September. Apparel prices tend to be volatile on a month-to-month basis, posting six increases and six decreases ranging from -2.2 percent to 2.9 percent over the last 12 months. From a year ago, apparel prices are up 3.4 percent.
The Consumer Price Index, which includes everyday purchases as well as infrequently purchased, big-ticket items and contractually fixed items, rose 0.3 percent on a not-seasonally-adjusted basis in September. Over the past year, the Consumer Price Index is up 5.4 percent.
The Consumer Price Index excluding food and energy rose 0.1 percent for the month (not seasonally adjusted) while the 12-month change came in at 4.0 percent. The 12-month change in the core CPI was just 1.3 percent in February.
After seasonal adjustment, the CPI rose 0.4 percent in September while the core increased 0.2 percent for the month. Within the core, core goods prices were up 0.2 percent in September and are up 7.3 percent from a year ago while core services prices were up 0.2 percent for the month and are up 2.9 percent from a year ago.
Among the notable increases in the core goods category were new vehicles (up 1.3 percent in September and 8.7 percent from a year ago) and household furnishings and supplies (up 1.3 percent for the month and 4.8 percent from a year ago).
Among core services, gainers include motor vehicle insurance (up 2.1 percent and 4.8 percent from a year ago) and owners’ equivalent rent (a.k.a. housing, up 0.4 percent and 2.9 percent from a year ago), while decliners include public transportation (-5.0 percent), lodging away from home (-0.6 percent but up 17.5 percent from a year ago), and auto rentals (-2.9 percent but still up 42.9 percent from a year ago).
Prices for many goods and services in the economy remain distorted by lingering effects from government restrictions on consumers and businesses including shortages, logistical and supply chain issues, and labor problems. As activity returns to normal, supply and demand will adapt and likely lead to slower price increases, but it may take some time before the economy completely returns to normal functioning. Nevertheless, a 1970s-style upward price spiral remains unlikely.
Note: The Everyday Price Index for August is based on incomplete data due to restrictions on data collection by Bureau of Labor Statistics personnel because of the Covid-19 pandemic.
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