US CPI (M/M) Nov: 0.8% (Est 0.7%; Prev 0.9%); CPI Ex Food And Energy (M/M) Nov: 0.5% (Est 0.5%; Prev 0.6%) - Inflation Remains Elevated In November - Neil's Summary

US CPI (M/M) Nov: 0.8% (est 0.7%; prev 0.9%) CPI (Y/Y) Nov: 6.8% (est 6.8%; prev 6.2%) CPI Ex Food And Energy (M/M) Nov: 0.5% (est 0.5%; prev 0.6%) CPI Ex Food And Energy (Y/Y) Nov: 4.9% (est 4.9%; prev 4.6%)

Consumer Price Index-November 2021 (bls.gov)

After September and October CPI showed reacceleration from the summer levels, which had seen inflation trending down a bit, November came in very hot as well, decelerating only a tenth on a m/m basis (to 0.8% from 0.9%) for the headline. But as we're entering into a brief period of much lower inflation a year ago, the y/y figures will likely continue to climb through at least January. So the y/y moved to a new nearly 40-year high of +6.8% (the highest since 1982). The y/y number came in as estimated while the m/m was one tenth above expectations. M/m was still the third hottest read since the start of the pandemic. The increases remain broad across most categories. Gasoline, shelter, food and vehicles were among the larger contributors to the month-over-month increase (we'll go through in more detail below). Household furnishings, apparel and airfares also had larger than normal contributions. Full tables at the end.

Looking at core (stripping out food and energy), it similarly decelerated by a tenth m/m (to 0.5% from 0.6%) with the y/y moving higher to 4.6% (for the same reasons (low year-ago comps)). Both those numbers were as expected. The y/y gain was a 30-year high.

Looking at more details, looking first at the headline, it was again carried by energy (up 2.5%, but down from 4.8% in October) but food was also up a hefty +0.7% in November (although that also was down from +0.9% in October and September). Food and energy are up 6.1% and 33.3% y/y respectively. That food y/y is the most since 2008. Leading energy was gasoline, up +6.1 (same as October) and fuel oil, up +3.5% m/m (but down from +12.6% in October). Gasoline is up 58.1% y/y, the most since 1980. Electricity and natural gas decelerated to a +0.3% gain (and we could easily see natural gas print negative for December).

For food, we saw deceleration in both "food away from home", which was up 0.6% (down from 0.8% in October) and is now up 5.8% y/y (the most since at least 1981) while "food at home" decelerated to +0.8% from 1.0% in October and 1.2% m/m in September. That is now up 6.4% y/y, the most since 2008. Meats and poultry led the increase again this month in food but the increases were broad based with every grocery store food group increasing for a third month.

Turning to goods, price increases continue to be driven (pun intended) by vehicles with used cars and trucks up 2.5 percent for a second month. The index for new vehicles rose 1.1 percent in October, its eighth consecutive monthly increase (but down from 1.4 percent in October). Used cars and trucks are up 31.4 percent y/y and new vehicles are up 11.1 percent, the largest 12-month increase since at least May 1975. Apparel also was up strongly +1.3% (up +5.0% y/y). No major goods category declined.

Turning to services, overall services excluding energy were up 0.4% after increasing 0.4% in October and September as well (now up 3.4% y/y). The biggest increase was air fares (+4.7%). Motor vehicle insurance (-0.8%) and hospital services (-0.3%) were the only decliners. Motor vehicle maintenance and repair was flat. Otherwise all major categories increased at least +0.3% m/m with shelter, which is a third of the CPI and 40% of the core, remaining at +0.5%. Shelter is now up 3.8% y/y, the most since 2007, and I think that's we're likely to see that continue to stay elevated with numerous surveys of house and rent prices up many multiples of that.

So, the good news is we don't have to ask if this was consistent with "transitory" since Chair Powell officially retired that term. The big thing I'll be watching is m/m. We really will hopefully see that start to move back down to the 0.3% area soon. It will be a heavy lift with shelter likely to run above that though. We know the y/y numbers will continue to be "most since [insert date from decades ago]" for the next few months at least.

To some extent you can discount a lot of the increase as resulting from energy issues (which also are having a big impact on food) which have already started to moderate and supply chains keeping vehicle prices, etc., elevated. But there's clearly a broad based aspect to this as well that may prove to be much more sticky.

Here's a bit more granularity from the report for those interested (table below that):

Food

The food index increased 0.7 percent in November after rising 0.9 percent in both September and October. The food at home index increased 0.8 percent in November as all six major grocery store food group indexes rose; this was the third consecutive month that all six increased. The indexes for other food at home and for fruits and vegetables both increased 1.0 percent in November. The index for meats, poultry, fish, and eggs rose 0.9 percent in November. Within this group, the index for pork rose sharply, increasing 2.2 percent, while the index for eggs declined in November, falling 2.7 percent. The cereals and bakery products index increased 0.8 percent in November after larger increases in September and October. The index for dairy and related products increased 0.2 percent over the month, the same increase as the prior month.

The index for nonalcoholic beverages also rose 0.2 percent, its smallest monthly increase in the last 6 months. The food away from home index rose 0.6 percent in November following a 0.8-percent increase the prior month. The index for limited service meals continued to rise sharply, increasing 1.0 percent over the month, while the index for full service meals rose 0.4 percent in November. The food at home index rose 6.4 percent over the past 12 months, the largest 12-month increase since the period ending December 2008.

All of the six major grocery store food group indexes increased over the period. The index for meats, poultry, fish, and eggs increased 12.8 percent, with the index for beef rising 20.9 percent. The index for dairy and related products posted the smallest increase, rising 1.6 percent over the last 12 months. The remaining major grocery store food group indexes posted increases ranging from 4.0 percent (fruits and vegetables) to 5.7 percent (other food at home). The index for food away from home rose 5.8 percent over the last year, the largest 12-month increase since the period ending January 1982. The index for limited service meals rose 7.9 percent over the last 12 months, and the index for full service meals rose 6.0 percent. The index for food at employee sites and schools, in contrast, declined 44.9 percent over the past 12 months

Energy

The energy index rose 3.5 percent in November after rising 4.8 percent in October. The gasoline index rose 6.1 percent in November, the same increase as the prior month. (Before seasonal adjustment, gasoline prices rose 2.8 percent in November.) The electricity index increased 0.3 percent in November after rising 1.8 percent in October. The index for natural gas rose 0.6 percent in November following a 6.6-percent increase the prior month. The energy index rose 33.3 percent over the past 12 months with all major energy component indexes increasing sharply. The gasoline index rose 58.1 percent over the last year, its largest 12-month increase since the period ending April 1980. The index for natural gas rose 25.1 percent over the last 12 months, and the electricity index rose 6.5 percent.

All items less food and energy

The index for all items less food and energy rose 0.5 percent in November. The shelter index increased 0.5 percent over the month, as the indexes for rent and owners’ equivalent rent both rose 0.4 percent; these increases were the same as in October. The index for lodging away from home rose 2.9 percent in November after rising 1.4 percent in October. Vehicle indexes also continued to rise in November. The index for used cars and trucks rose 2.5 percent over the month, the same increase as in October. The index for new vehicles rose 1.1 percent in November after a 1.4-percent increase in October.

The index for household furnishings and operations increased in November, rising 0.8 percent, the same increase as in October. The apparel index rose 1.3 percent in November after being unchanged in October. The index for airline fares turned up in November, rising 4.7 percent after declining in recent months. The medical care index also rose in November, increasing 0.2 percent after rising 0.5 percent in October. The index for physicians’ services rose 0.4 percent, and the index for prescription drugs increased 0.3 percent, while the index for hospital services declined 0.3 percent.

A few indexes declined in November. The motor vehicle insurance index fell 0.8 percent over the month after being unchanged in October. The recreation index fell 0.2 percent in November after rising in each of the last 9 months. The index for communication also declined 0.2 percent in November.

The index for all items less food and energy rose 4.9 percent over the past 12 months, its largest 12- month increase since the period ending June 1991. The index for used cars and trucks rose 31.4 percent over the last 12 months, and the index for new vehicles rose 11.1 percent. The shelter index rose 3.8 percent, the largest 12-month increase since the period ending June 2007. The index for medical care increased 1.7 percent over the last year

Here's the table of the major categories (there's a more granular one, but it's several pages long).

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