Friday, September 16, 2016

CPI Impresses, But......

This morning we got what I guess is considered good news that prices rose.  Or in other word we are all paying more for everything. Yes I know that's good to see price levels rise, and it's what the Fed is watching to help guage when interest rates will be given a hike too.


CPI rose last month by 0.2%, and core CPI(excl. food & energy) rose by 0.3%. Yes I know if you look closely CPI actually rose by 0.19889% according to official stats.


What's concerning is the fact that rising "Owners Equivalent Rent of a Primary Residence"(yes I know it's a long term to describe overall housing costs), and medical care costs comprised a large part of the increase. Owners equivalent rent has risen by 0.3% every month since April which is good for landlords, but bad for tenants. Medical costs showed a 1% jump led by hospital services (1.7%), and prescription drugs (1.3%).  So much for the ACA keeping a lid on prices.

Now the "but" part of our headline.  Earlier in the week we saw some disappointing Retail Sales(-0.3%), and Industrial Production (-0.4%). For awhile we were seeing some decent numbers out of both reports. Now are definitely seeing some conflicting signals, and it's making next weeks FOMC meeting all the more interesting.

Don't misunderstand me though not everything is bad when you look under the hood of the reports. The headline numbers are what most people focus, and rightly so as it usually paints a decent picture of the overall trend. I'll discuss this in more detail in the weekly review.

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