Household Energy and Furniture lead uptick, while Appliances, Windows and Flooring are down
Although the Consumer Price Index (CPI) rose in September at the fastest rate in four months, up 1.4% over the last twelve months, it still remains lower than the 2.3% pace just prior to the pandemic.
The “core” CPI is up a higher 1.7%, but also below its recent history. The calculation for the core CPI excludes both food and energy items on the premise that they tend to fluctuate more for reasons not related to true inflation, such as weather conditions. The core index better captures the underlying inflation rate.
For the month of September, consumer prices rose just two-tenths of a percent (0.2%), about the same as the average monthly increase for the year before the pandemic. The largest contributor was Household Energy costs, which rose by 1.4% in September. For the previous 12 months, this indicator had actually fallen by 0.1%.
As is true each month, prices for some consumer items increased while others declined, driven by changing needs of consumers and the ability of businesses to align their supplies with those changes.
In the chart below, along with Household Energy, Furniture also registered a significant uptick, at 0.8%, while Appliances, at -1.8% and both Windows and Transport, at -.9% apiece, led on price easing. Along with Appliances and Windows, another product related to our industry, Flooring, also dropped significantly. The key category of Medical Care was unchanged for September, although it remains 4.9% higher than a year ago.
Inflation in Housing Products
Housing products and services account for the largest proportion in the consumer price index calculation. These are products that consumers do not purchase for their personal use, but rather for their homes. They include the amount spent for shelter, such as rent, as well as the cost of utilities and the earlier mentioned Appliances, Windows and Flooring.
Altogether, they account for about 40% of all items purchased or spent by households as used in CPI calculations by the Bureau of Labor Statistics.
The rate of inflation for all housing products and services combined has exceeded total inflation over the last 50 years. The chart above shows that in the twelve months ending in September, Housing CPI rose 2.0%, following that pattern and higher than the overall CPI increase of 1.4%.
Over the last decade inflation has risen by 20%, or roughly two percent per year. Housingcosts have risen at a 2.6% annual pace, exceeding overall inflation from 2015, as indicated by the chart below.
The chart also shows the longer-term pattern of Flooring, Appliances and Windows, which have seen their prices fall over this period. Other products and services, not included in the chart, have risen faster to bring the overall housing CPI higher.