Breakdown of CPI DATA and Real Earnings, June 2022

It is that time of month, to survey the damage from inflation. The BLS report was released this morning and it was a whopper. (historical releases)

Remember that 8.6%~8.9% forecast? Toast!!!

From the release...

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.3 percent in June on a seasonally adjusted basis after rising 1.0 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 9.1 percent before seasonal adjustment.

The result looks like this...

I didn't fare much better, with an increase at 8.0% y/y and 1.1% m/m.

The various inflation numbers, from the BLS and others ended up looking like this. The Eurostat is my estimate, based on several months of data collection and attempting to understand their method. Their last data published for the USA was in April. 

With nothing really good on the inflation front, the hourly real earnings were dismal, falling further below the pre-covid February 2020 number.

The weekly real earnings followed the same pattern...

I will attempt a July reading for the CPI-U, as I do expect the month to month to be nearer to "0", than this month's 1.3%. This is mostly due to gasoline prices continuing to fall. This mornings national average was $4.61, and is steadily falling to possibly $4.11 per gallon... based on current future's pricing. This would be pricing back in the good old days, of April's average. 

March was actually higher at $4.22; May at $4.44; June at $4.93. February was at $3.52, for those interested.  However, the end of July will most likely still be in the $4.30 range, with a July average of approximately $4.55. (Barring any disruptions in refinery operation, etc.)

Backing the gasoline's rise out of the index, the CPI-U would have been about 8.4%. So the fall off of gasoline pricing does have a significant impact for this month's projections. Also, the core came in a bit higher than anticipated. 

So, I will project 0.3%~0.5% month to month and a reading of 8.9%~9.1%. I fervently hope I am over shooting, this time. 

Once again, in the too early to project C.O.L.A. category, I am adjusting to 9.4%~9.6%. The past few months have been much hotter, year on year, but we are now entering the normal seasonal slowdown period in certain areas and the rate of inflation "should" start to ease. 

The should start to ease, might be clearer with tomorrow's PPI release. I would hope for softer numbers. Friday's release of the retail sales, might also provide a further hint to "demand destruction". Then there is the role being played by the strong dollar. Without that, WTI crude would be about $115 per dollar. This also is impacting imported goods as well. How much of that "trickles down" to the consumer... is to be seen.

Breakdown of CPI DATA and Real Earnings, May 2022

Last month, I shot my mouth off and predicted the CPI for May would come in between 7.9%~8.2%. That was optimistic, as it came up as 8.58%, rounded to 8.6%.

The BLS report for May... (historical archives)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment.

The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.

My own inflation report continues to see the onslaught of higher prices, and I am not happy😠...

Here is a compilation of various inflation reports for May to date. Note my price index jumped to 7.6%. This is not one of those happy increases. Food continues to bite, as those hoarding supplies are beginning to dwindle.

The BLS also released the May Real Earnings Report.

Real average hourly earnings for all employees decreased 0.6 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 1.0 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.7 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.  

Real average hourly earnings decreased 3.0 percent, seasonally adjusted, from May 2021 to May 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.9-percent decrease in real average weekly earnings over this period.

Since February 2020...

Based on real earnings, the workforce is back to February 2020 level. It is hard to imagine any improvement, with current inflation eroding earnings. 

The inflation report was a surprise, as it was above forecasts. However, the forecast was revised upward throughout the month. Obviously the forecasts were not raised fast enough. Don't worry (or maybe worry), the forecasts for June report, due out in July... calls for a range 8.64%~8.91%, at this time. With this past month at 8.58% and it already being near mid June, there is a near 100% chance that June's inflation rate will outpace May. The likely headline in July, will once again harken back to the December 1981 rate of 8.92%. Not much further back, as the November 1981 rate was 9.59%.

The PPI comes out Tuesday and we can see the future of inflation, in my opinion. I will be looking at the various groupings as well. We have the essentials, which fall into the food and shelter category; the things we complain about, but could possibly cut back on; the stuff we would like to have; and the stuff that dreams are made of.

The retail trade report is due out on Wednesday and will indicate something, although not sure of what. Several companies are stating they have an abundance of stuff, that we are no longer purchasing as if the world ends tomorrow. Which seems to indicate something related to the previous paragraph.

Still looking for that glimmer of hope, which might be in the CPI-W. As this is based on 3rd quarter, year over year average, the forecasts are indicating a possible 8.7%~9.0% increase. UNFORTUNATELY, that also indicates some serious inflation yet to come. It should be remembered that C.O.L.A. is based on 3rd quarter average, versus same period of a year earlier. While the CPI-U is the headline, the CPI-W was up 9.3% YoY. Which is odd, as years past had the CPI-U accelerating faster than the CPI-W. 

Hope you have a good weekend!!

Breakdown of CPI DATA and Real Earnings, April 2022

 

The BLS report for April...

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in April on a seasonally adjusted basis after rising 1.2 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.

From last month...

I can fairly confidently (and sadly) state that April numbers due out in May, will likely be north of 8.0%, such as between 8.0% and 8.5%.

So it was 8.3%, or more accurately... 8.26%. That is nothing to brag about, as it bites hard.  

Here is the chart for various inflation figures...

I am drifting upward from 6.4% annual to 6.7%.

While the headline CPI slipped from 8.5% to 8.3%, my own CPI rose. This is largely due to food prices, as having "hoarded" many items and currently reducing the inventory... more pantry items come into play. Additionally, certain medical costs and supplies have edged up a bit more than previous periods. 

The April Earnings Report from the BLS...

WOW... Since February of 2020, an increase of one penny.

The slide has slowed, at least since last month. But can it continue?

Difficult to see how inflation would slow for May, as I think food prices will continue the upward spiral and energy, which was flat to slightly down in April, appears to be ratcheting up again. Of course, there might be some slowing in other areas, but is so hard to gauge. 

My best guess is 7.9%~8.2% for the May reading which comes out in June.

Now for the really, way too early prediction for C.O.L.A. which is officially announced in October AND is based on average CPI-W 3rd quarter year over year... 6.9%~7.2%. Yeah, I know that is not up to par with current inflation rates, but the big money is betting on inflation really cooling in the 2nd half of the year, which starts in July. Possibly even some demand destruction, so it will be interesting to watch. 

The PPI comes out tomorrow and might provide some indication of tapering.

Breakdown of CPI DATA and Real Earnings, March 2022

 

The BLS report for March...

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.2 percent in March on a seasonally adjusted basis after rising 0.8 percent in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.5 percent before seasonal adjustment.

From last Month...  

The forecast for March is a bit blurry, due to energy prices, but the expectations would be 8.2% ~ 9.1%. I would unhappily lean towards the 8.7% range, just based on the rapid rise of gasoline during this month, although it may be peaking as I type. I would expect the upward trend in food prices to continue. 

With this release comes a variety of other numbers...

I am unhappily at 6.4%...

Like many, my food inflation is creeping up. I am able to stay below the headline number, due to some things I don't do. I don't buy a new car, so that 12.5% inflation does not impact me. I do estimate the replacement of my used car, but I would not purchase a used car outright. So I adjust the difference with a trade in... which oddly sees my trade in value also increasing, albeit not as fast as the used vehicle to be purchased. But still the inflation rate is significantly lower than 35.3%.

I should also mention that health costs have thus far inflated at a much lower rate, which still worries me. Hopefully I don't become sick with worry.

On to earnings report... (REAL means over and above inflation... or sometimes below)

This is the 3rd straight month of declines, with it nearly back to February 2020 levels. (Note, I have not adjusted all the adjustment the BLS has made... so it may be more.)

The 4th consecutive month of declines in weekly wages. 

Going forward, it is getting even harder to forecast inflation, as several variables are at play. It would appear that many consumables are starting to slow, which would indicate a potential for slowing of inflation in that area. But then again, China is in lockdown in so many places that further supply disruptions are possible.

Gasoline costs may abate, but likely due to decreased demand and the aforementioned China slowdown. 

Food is the one area that will continue to see inflation, as all manner of issues are arising. 

I can fairly confidently (and sadly) state that April numbers due out in May, will likely be north of 8.0%, such as between 8.0% and 8.5%. 

EDIT: just hours after writing this, the Chinese are loosening the lockdown and crude and gasoline prices have taken off. We'll see where this leads.

Breakdown of CPI DATA and Real Earnings, February 2022

The BLS Report from February, 

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in February on a seasonally adjusted basis after rising 0.6 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.9 percent before seasonal adjustment.

From Last Month... The forecast for February numbers, due out in March are 7.59%~7.9%. So it was on the upper end. Remember this is inflation for the month of February.

With this release comes a variety of other numbers...

I am at a 5.9% annual rate...

This rise was largely attributable to food at home, which on the BLS report, outpaced the overall inflation rate at 8.6%

The forecast for March is a bit blurry, due to energy prices, but the expectations would be 8.2% ~ 9.1%. I would unhappily lean towards the 8.7% range, just based on the rapid rise of gasoline during this month, although it may be peaking as I type. I would expect the upward trend in food prices to continue. 

Of course it is all speculation, as we are not at mid month, but I feel it is safe to say that prices will not recede.

On to the earnings report...

This was a disappointment, with an -11¢ per hour decline. Maybe weekly earnings improved...

NO. For the 3rd straight month real weekly earnings declined. Remember all the data thus far is for February.

Going forward, we must remember the 8.0% number, as that rate of inflation is largely without the impact of the Russia-Ukraine war. The impact of the war on energy and food costs is yet to come. We must also remember that weather impacts food costs and with spring around the corner and the thought of summer vacations on the horizon... energy costs will likely rise as inventories of petroleum products are at or below the 5 year range. 

Earlier I mentioned the expectations of inflation rates for our current month, due out in the 2nd week of April. Going forward into April potential expectations, the inflation rate for a month to month increase is staggering (think June 2008 or 9-2005's Katrina or 1-1990 Gulf War) as well as the double digit year to year (Oct-1981). 

I suspect the economy will begin to cool at about this time and the longer range inflation forecasts indicate as much. Tuesday will bring the PPI report out and some indication of pricing going forward might be seen. It will be followed the next day with retail sales, which should be interesting. A lot of revisions, etc. last month under the guise of "usual annual" stuff, so it will be interesting to see the spin on that report.

Buckle up, the peak is still a ways off, imo.

Another Month Gone By.

How time flies...Here it is the last day of September.

Completed the weekly curbside grocery thing, which begins on Wednesday with Walmart and concludes on Thursday with Kroger. There are certain things that are only from one or the other. Then there are the things that maybe Walmart doesn't currently have and Kroger does. 

The pantries are full and it is down to replacement items and the perishables. I suspect I am not the only hoarder of pantry items, as they seem to be more difficult to order. Is it due to hoarding or due to supply chain issues.

Everything is blamed on supply chain issues and we are told to buy normally, as there are plenty of supplies. Unfortunately, there is a shortage of something, then the news of that shortage, then hoarding that exacerbates the shortage and then the politicos telling us to buy normally.

I seem to recall that scenario playing out in the U.K. recently and currently on going. People were buying petrol (gas, gasoline) normally and forecourts (gas stations) started running out of petrol. 

The forecourts running out due to lack of lorry (truck) drivers splashed across the news groups and predictably... the surge was on. Naturally the politicos admonished everyone for hoarding petrol, while simultaneously acknowledging the shortage of lorry drivers, while advising people to purchase normally. Normally is what caused some of those forecourts to run out of petrol in the first place... exposing a system problem. 

Naturally the Petrol lorry driver shortage morphed into acknowledgement of an overall lorry driver shortage across damn near everything. Ooops... that item out of stock and awaiting the next lorry delivery became something more worrying. No surprise really.

It has become almost normal for nothing to happen until a crisis occurs. When that crisis is resolved everyone seems to pat themselves on the back and then sit idly by until the next crisis. I understand the political gain from managing a crisis vs preventing a crisis. 

No one notices the crisis prevention activity or the individuals involved in preventing a crisis. Generally, they are disregarded. Oh but those people that get involved in resolving a crisis are to be revered. Never are they punished for their role in allowing the crisis to arise.

In any such case, we currently have a supply chain crisis in the U.S. It is actually multiple crises over a great swath of transportation systems. All of which are quite willing to deflect blame to others as to how the crisis began. Thus, at some point in the future, all will be resolved and people will claim their labor produced this magnificent resolution. 

Of course any reflection will be smoothed over and any attempt to determine the cause while it is still on going will be deflected with... "now is not the time to place blame, that can come later".

Has anyone ever lived long enough to see that "later"? Later is always at some point in time, when those crisis management types have moved on, etc. Which is too late.

So kudos to those that prevent crises and manage to keep my hoarding pantry full. To all those that are working diligently, behind to scenes to keep things going.