Inflation is Up 7% in December Reaches Fastest Pace Since 1982

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by Mish Shedlock, The Street:

For December the CPI rose 0.5%. From a year ago the CPI is up 7.0%, the most since Jimmy Carter.

Price Hikes From a Year Ago    

• CPI 7.0%
• Shelter 6.0%
• Excluding Food and Energy 5.5%
• Food and Beverages 6.0%
• Owners’ Equivalent Rent 3.8%
• Medical Care Services 2.5%
• Rent of Primary Residence 3.3%

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CPI Month-Over Month 

CPI Month-Over-Month SA 2021-12

CPI Year-Over Year Since 1971

CPI Year-Over-Year Percent Change NSA 2021-12

The last time the CPI rose this much, Jimmy Carter was president and oil prices were soaring in an Iranian supply crunch.

Owner’s Equivalent Rent 

Owners’ Equivalent Rent, the mythical price one pays to rent one’s own house from himself is the single largest item in the CPI. It has a current weight of 23.509%.

The series only dates to 1983. Prior to that, home prices were directly in the CPI. Today, the BLS views home prices as a capital expense.

Economists have a good case that home prices are a capital expense, but historical comparisons are inaccurate. More to the point, home prices are a measure of inflation that the Fed and BLS just don’t count.

Housing Adjusted CPI

CS National Top 10 Metro CPI OER INDEX 2021-10

It should be difficult if not impossible to say that housing prices are not a measure of inflation.

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