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CPI Prints Hot and Continues to Dramatically Overstate Real Inflation

CPI Prints Hot and Continues to Dramatically Overstate Real Inflation

New York, NY, October 12, 2023 (2 Min Read) ~ Headline inflation came in at .4% vs. consensus of .3% and core was in line at .3%. The most notable element of the report was that the BLS estimate of shelter inflation increased to .6% or an annualized rate of 7.2%, and the year-over-year estimate of inflation is still 7.2% despite market increases in both housing prices and apartment rents down slightly over the last year. The reason for the discrepancy is that the BLS has a flawed methodology of using archaic surveys and then only updating the survey every 6 months, resulting in a lag in the estimate of 12-18 months.

CPI-R is our proprietary measurement of core inflation that uses the Case-Shiller index to estimate shelter inflation.

Core CPI vs CPI-R Adjusted Chart
Click on chart to open in full view

CPI-R was up only .2% for the month and up 1% year over year vs. the flawed BLS measure of .3% and 4.1% year over year.

We continue to forecast that the Fed will not raise rates again this cycle as it slowly recognizes that inflation is contained and that the economy is likely to slow due to rises in short and long-term interest rates.

We believe that long-term interest rates will drop as it becomes more obvious that the Fed is on hold and as the European recession deepens which will force the ECB to cut rates as early as the first quarter of next year.

See data table below or click HERE or on the image below to open up full report summary PDF.

Core CPI vs CPI-R Adjusted Table



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