CPI Latest DATA results, July 12, 2023

The BLS report was released this morning and it was a shade below consensus estimates. (historical releases)

The consensus: 0.2% increase in CPI (monthly); 0.3% increase in core CPI (monthly); 3.0% Y-Y CPI; and core 5.0% Y-Y. The result: 0.2% CPI (monthly); 0.2% core (monthly); Y-Y CPI at 3.0%; and core at 4.8% Y-Y. The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in June on a seasonally adjusted basis, after increasing 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment.

The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.1 percent in June after increasing 0.2 percent the previous month. The index for food at home was unchanged over the month while the index for food away from home rose 0.4 percent in June. The energy index rose 0.6 percent in June as the major energy component indexes were mixed.

A lot was made about the year over year dropping for 12 consecutive months. It has, but that party is coming to an end, as July is set to pop up by +0.34% to +3.4% annual, and core up +0.4%, to +4.8% annual.

For some reason, the idea that 3.0% annual is normal!

Since January 1948~ January 2021, the average has been 3.5%, so it could be said 3.0% is normal. However, the 21st century up to January 2021... saw an average of 2.1%. So which "normal" is it?

While the report seems to be "good', let's not forget the index has risen 16.6% in 27 months and the cost of food at home has risen 19.9% during the same period.

The notion that consumers are under less stress due to this report is baffling. It is still an increase in most everything... except gasoline and energy et al. 

In the absolutely to early to project something category... the current outlook for C.O.L.A.

So far this month...

Time for more graphs... past 12 month CPI readings.

June, 2022 was the peak of annual inflation at 9.1%. Inflation for the following 6 months was 0.2% or 0.4% annualized. The major driver in those numbers were the dropff in energy prices. The following 6 months saw prices increase 2.8% or 5.6% annualized, as energy prices stabilized.  

To repeat the 2.97% annual inflation for next month would require a flat month to month CPI. That would require an extraordinary drop off from current expectations. Energy looks to be stable, so where would such a dropoff take place?

And finally... My CPI over the past 12 months.

Next up is the "Real Earnings Report".

Natural Gas Inventory Report, July 07, 2023

The Energy Information Administration released their weekly report yesterday.

And as customary... the Pacific Region.

In California, prices declined week over week but remained elevated compared with other U.S. pricing hubs. The price at SoCal Citygate in Southern California decreased 98 cents from $4.83/MMBtu last Wednesday to $3.85/MMBtu yesterday. Consumption of natural gas in the electric power sector in California increased by 92% (1.0 Bcf/d) week over week, as temperatures increased. 

Select inventories of EU and UK... 

Yes, I am aware the capacity numbers change from time to time. Why... I don't know. If it troubles you... then you can figure it out.

While up in many area, the EU wide number slipped to 78.63%, from last week's 78.86%. Still remarkably high for the season. 

A brief look at the 12 month highs for futures... TTF (EU) and UKG (UK).

Showing an upward drift.

However, current week ending prices...

Snapshot of the past, the current and the future outlook for prices.

Just for comparison, the UK current pricing would suggest £1,578.22 per annum, while the 12 month high (Jan-24) would suggest £2,318.11. OFGEM has a cap around £2,047, which is line with the October futures.

It should be noted the OFGEM cap reduction was more of a reduced consumption number, not so much as lower price per unit. Make of that, as you wish.

Gasoline consumption per latest EIA data, July 06, 2023

Gasoline prices (per AAA) eased down  from last report to $3.529. One year ago the price had ballooned to $4.779, but was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption increased week over week, and stands 5.0% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands steady at +98.7M barrels. It has basically remained flat for the past 3 months.

Rinse and repeat. There remains a slight upward bias, even though pump prices edged down this past week. 

Nothing dramatic, imho.

Crude and Petroleum Product Inventories - July 06 2023

Data per the EIA weekly report. 

Crude stocks fell by -1.5M barrels, from last week, and remains down -2.5% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +1.6% above normal.

Distillates inventory slid -1M barrels; and Gasoline inventories dropped by -2.5M barrels. Distillates and Gasoline are both below 5 year and 3 year adjusted average inventories.

The SPR fell another -1.458M barrels.

WTI is $72.09, compared to $69.45, one week ago, and $101.53, one year ago.

Refinery output slid on a weekly basis, and compared to year ago levels.

For anyone interested, the U.S. has exported 735M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 4.2M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 27.7, compared to last year's 25.8 days.

Review of PCE, GDP, etc., for end of June, 2023

Another month to review (with some comments at the end)...

The following looks good, except....

The outlook for core is actually higher than the total inflation. Which means food and energy are the main drivers of overall lower inflation. Sounds good, except it really isn't food as much as energy. Energy crested in June of last year and then quickly slid... going into September. 

Just saying, the falling overall inflation numbers may come to an abrupt halt in the fall.

Now for the adjustments...

Personal Income and Outlays...

Now for the GDP...

The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. 

I highlighted my area of concern. Note the statement of upward revision in consumer spending, then review the PCE expenditures directly above. January was good and presumably the revision upward in February would match up with the quoted statement.

However, April was revised up a mere +0.2 from original flat and May is also flat. 

So where is the growth coming from in the 2nd quarter?

Natural Gas Inventory Report, June 30, 2023

The Energy Information Administration released their weekly report yesterday.

As always... the Pacific Region...

Prices increased in all West Coast markets this report week. At PG&E Citygate in Northern California, the price rose 96 cents from $3.02/MMBtu last Wednesday to $3.98/MMBtu yesterday. The price at SoCal Citygate in Southern California increased 3 cents from $4.80/MMBtu last Wednesday to $4.83/MMBtu yesterday. The price at Sumas on the Canada-Washington border rose 59 cents from $2.02/MMBtu last Wednesday to $2.61/MMBtu yesterday.

Select inventories of EU and UK... 

Overall, very good, with EU wide numbers at 78.86% full.

A brief look at the 12 month highs for futures... TTF (EU) and UKG (UK).

A slight uptick for the 12 month, but still below the 5-5 picture. 

Current week ending prices...

Current futures (August v 12 month high)

Basically, the current futures are about where they were 2 years ago, when the EU was worried about Russia messing with natural gas deliveries and woefully inadequate natural gas stocks. 

Has the storm been weathered? 

Gasoline consumption per latest EIA data, June 28, 2023

Gasoline prices (per AAA) eased down  from last report to $3.556, or -2.5¢. One year ago the price had ballooned to $4.881, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption increase week over week, and stands 4.5% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +98.7M barrels. It has basically remained flat for the past 3 months.

Where will pump prices be next week? My estimate last week was ±7¢, with a downward bias. Result was down -2.5¢. Sooo... ±5¢, with an ever so slight upward bias.