Key Takeaways:
- Consumer goods portion jumps even higher, 11.9 percent over last year
- Gas prices at the pump are nearly 60 percent higher than a year ago
- The Housing industry CPI is up by 4.8 percent, below the overall 6.8 percent, but highest for the industry since 2001
- On a positive note, prices for major appliances, which had been up over 15% early in the year, have been dropping significantly
By Manuel Gutierrez, Consulting economist to NKBA
November consumer price data from the Bureau of Labor Statistics shows a continuation of the inflationary trend. In fact, the Consumer Price Index (CPI) hit a 39-year high of 6.8 percent for the month, more than half a percent higher than the previous month’s 6.2 percent increase (Figure 1.)
The price acceleration began in earnest earlier this year, when the annual price increase saw a jump from 2.6 percent in February to 4.2 percent in March. Since then, the upward trend has continued unabated.
Although prices for both goods and services, the standard way CPI data is split, have both accelerated this year, the brunt of the increases have come from goods. They hit 11.9 percent in November, a number not seen since the waning months of the Carter administration. Services, on the other hand, have risen more modestly since March, moving from 1.8 percent year-over-year to the latest upward gain of 3.8 percent. Based on recent indications, costs for services should accelerate over the next few months as businesses that provide services, such as transportation and personal care, are struggling with higher labor costs which will inevitably be passed on to consumers.
Prices for major appliances have dropped significantly since the beginning of the year when year-over-year increases had exceeded 15 percent.
A mixed bag emerges when the housing component is examined. All Housing in Figure 2, which includes both goods and services as it relates to the industry, is up 4.8 percent in November compared to a year ago. Although this is below the composite increase, the last time total housing costs rose at this pace was in January 2001.
As with the overall CPI, the trend has been one of a steady increases each month since the beginning of the year.
For specific product components within housing, increases vary. Total Appliances are up 4.9 percent, Flooring 7.6 percent, and Windows 10.7 percent.
Both Windows and Flooring hit historical inflation highs in November, although such component data is only available since 2000.
On the positive side, price inflation for household Appliances moderated in November to 4.9 percent. The slow-down was caused by a significant decline in prices for major appliances. The latter were running above 15 percent at the beginning of the year but fell to 5.5 percent in November.
Examining a variety of products and services purchased by consumers, price acceleration is found to be fairly broad-based. Gasoline and Energy are outliers and continue to lead in both monthly and yearly gains, with gas prices at the pump nearly 60 percent higher than a year ago, while Energy costs for homeowners and renters over a third more since last November.(Figure 3)
However, annual price increases for many products and services hover closer to the 6.8 percent range (Food is up 6.1 percent), as seen in the right panel of Figure 3. Meanwhile, Personal Care, Recreation and Medical Care are well below the annual average, with annual increases in the 2 percent to 3 percent range.
Charts:
