Inflation Hot: Consumer Prices Hit New Record High, Up 19% Since ‘Bidenomics’ Began

After January’s surprised upside shift, expectations have been adjusted up over the last month for another sizable MoM move in headline CPI. But that was not enough as the 0.4% MoM rise in the headline (as expected – highest since August) lifted CPI YoY up to +3.2% (hotter than the 3.1% exp)…

Source: Bloomberg

The 3-month annualized CPI rate was rose to 2.8% from 1.9%. The 6-month annualized core rate dropped to 3.2% from 3.3%.

Energy costs surged MoM as Core Services inflation slowed MoM…

Source: Bloomberg

Full CPI MoM breakdown:

The index for all items less food and energy rose 0.4 percent in February, as it did the previous month.

• The shelter index increased 0.4 percent in February and was the largest factor in the monthly increase in the index for all items less food and energy.

• The index for rent rose 0.5 percent over the month, while the index for owners’ equivalent rent increased 0.4 percent.

• The lodging away from home index increased 0.1 percent in February, after rising 1.8 percent in January.

• The airline fares index rose 3.6 percent in February, following a 1.4-percent increase in January.

• The index for motor vehicle insurance increased 0.9 percent over the month.

• The medical care index was unchanged in February after rising 0.5 percent in January.

• The index for hospital services decreased 0.6 percent over the month and the index for physicians’ services decreased 0.2 percent.

• The prescription drugs index fell 0.1 percent in February.

• The index for dental services was among those that rose in February, increasing 0.4 percent.

• The index for personal care fell 0.5 percent in February, following a 0.6-percent increase in January.

• The household furnishings and operations index fell 0.1 percent over the month, as did the new vehicles index.

• Among other indexes that rose in February were apparel, recreation, and used cars and trucks.

Full CPI YoY breakdown:

The index for all items less food and energy rose 3.8 percent over the past 12 months.

• The shelter index increased 5.7 percent over the last year, accounting for roughly two thirds of the total 12-month increase in the core CPI index

  • Feb Shelter inflation: 5.74% down from 6.04% in Jan

  • Feb rent inflation: 5.77%, down from 6.09% in Jan

• Other indexes with notable increases over the last year include motor vehicle insurance (+20.6 percent), medical care (+1.4 percent), recreation (+2.1 percent), and personal care (+4.2 percent).

Core CPI rose 0.4% MoM (hotter than the +0.3% exp) and up 3.8% YoY (hotter than the +3.7% exp), but still the lowest since April 2021…

Source: Bloomberg

The 3-month annualized Core CPI rate was rose to 4.1% from 3.9%. The 6-month annualized core rate rose to 3.8% from 3.5%.

Core Goods actually rose MoM for the first time since June 2023…

Goods deflation continues (-0.3% YoY) but has flattened out, while services inflation remains stubbornly high at +5.2% YoY…

Source: Bloomberg

And one step deeper – the so-called SuperCore: Core CPI Services Ex-Shelter index – soared 0.5% MoM up to 4.5% YoY – the hottest since May 2023…

Source: Bloomberg

While SuperCore CPI slowed MoM, there was a large jump in Transportation Services MoM…

Source: Bloomberg

Finally, we note that consumer prices have not fallen in a single month since President Biden’s term began (July 2022 was the closest with ‘unchanged’), which leaves overall prices up 19% since Bidenomics was unleashed. And prices have never been more expensive…

Source: Bloomberg

That is an average of 5.6% per annum (more than triple the 1.9% average per annum rise in price during President Trump’s term).

So, about that shrinkflation – did companies only ‘get greedy’ when Biden took office?

But it gets worse, real wage growth has lagged significantly for the average joe in America…

Source: Bloomberg

Despite a very modest decline in Feb, Food costs are up over 21% since Biden’s term began, but non-supervisory wages are up only 18%.

Bidenomics for the win!

Are we going to see a replay on the ’70s?

Source: Bloomberg

The market narrative of slow and steady disinflation just broke harder.

…or are we still set for a massive wave of depressionary deflation?