AIER's Everyday Price Index Sees Biggest Monthly Jump Since January

Sep. 13, 2023 9:22 PM ETACTV, AFMC, AFSM, ARKK, AVUV, BAPR, IVOO, IVOV, IVV, IVW, IWC, IWM, IWN, IWO, IWP, IWR, IWS, IYY, QQQ, SPLV, SPMD, SPMO, SPMV, SPSM, SPUS, SPUU, SPVM, SPVU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SPYD, SPYG, SPYV, SPYX, SQEW, SQLV, SSLY, SSO, SSPY, STLV, SVAL, SYLD, TMDV, TPHD, TPLC, TPSC, UAUG, UJAN, UMAR, UMAY, UOCT, UPRO, USMC, USMF, USVM, TBT, TLT, TMV, IEF, SHY, TBF, EDV, TMF, PST, TTT, ZROZ, VGLT, TLH, IEI, BIL, TYO, UBT, UST, VGSH, SHV, VGIT, GOVT, SCHO, TBX, SCHR, GSY, TYD, EGF, VUSTX, FIBR, GBIL, UDN, USDU, UUP, RINF, AGZ, SPTS, FTSD, LMBS

American Institute For Economic Research

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Summary

In August 2023, the AIER Everyday Price Index rose 0.87 percent, lifting the index from 285.2 to 287.7.
The month-to-month headline CPI number rose 0.6 percent versus 0.2 percent seen the previous month.
With the release of the data, market-implied policy rates ticked up in the three- to six-month range, indicating higher expectations of another 25-basis point Fed Funds increase toward the end of 2023.

Abstract financial graph with up trend line candlestick chart in stock market on blue colour background — champc

By Peter C. Earle

In August 2023, the AIER Everyday Price Index (EPI) rose 0.87 percent, lifting the index from 285.2 to 287.7. This was the largest monthly percent increase since January 2023 (0.93 percent). Additionally, 287.7 is the highest recorded index value, besting the previous EPI high of 287.1 registered in June 2022.

AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)

Within the EPI, the largest monthly price increases were seen in motor fuel, housing fuel and utilities, and food away from home. Pet products, housekeeping supplies, and fees for lessons and instruction saw the largest declines in price, month-to-month.

On September 13, the Bureau of Labor Statistics (BLS) released Consumer Price Index (CPI) data for August 2023. The month-to-month headline CPI number rose 0.6 percent versus 0.2 percent seen the previous month. The increase was in line with surveys and was the largest increase in 14 months. Core (excluding food and energy) month-to-month CPI rose 0.3 percent versus an expected rise of 0.2 percent.

The largest contributor to the increase in the monthly headline CPI was gasoline, which accounted for over 50 percent of the increase. Shelter, which has now risen for 40 consecutive months, also played a role in the August acceleration of US prices. In the core index, the month-to-month rise was accounted for by rents, motor vehicle insurance, medical, and personal care. Prices for used cars and trucks and recreation declined the most in August.

August 2023 US CPI headline & core, month-over-month (2013 – present)

August 2023 US CPI headline and core — Source: Bloomberg Finance, LP

On a yearly (August 2022 through August 2023) basis, headline CPI rose 3.7 percent versus an expected 3.6 percent increase, compared with a 3.2 percent increase in July 2023. The increase in the year-over-year numbers is accounted for mostly in energy and food price increases. Year-to-year core CPI fell from 4.7 percent in July 2023 to 4.3 percent in August 2023. Again, shelter was a major (over 70 percent) contributor to the increases, as were motor vehicle insurance (up 19.1 percent), personal care (5.8 percent), and new vehicles (2.9 percent). The core CPI increase was in line with expectations.

August 2023 US CPI headline & core, year-over-year (2013 – present)

The core month-to-month CPI increase of 0.3 percent was the first increase since February, and comes at a time when likely Federal Reserve policy moves for the remainder of 2023 are being closely considered. From the July 4th weekend until yesterday, the average US gasoline price per gallon has risen from $3.89 to $4.29, a 10.3 percent increase and the highest price since November 2022. But while the increase in gasoline prices was driven more by refining hindrances (owing to the summer heatwave and likely temporary), price increases in air travel, motor insurance, and several other categories were negative surprises. Grocery prices increased, but at the slowest pace (annualized) in over two years.

With the release of the data, market-implied policy rates ticked up in the three- to six-month range, indicating higher expectations of another 25-basis point Fed Funds increase toward the end of 2023. Despite some improvements since the apparent peak 13 months ago, consumers and businesses are still contending with 31 months of above-trend rising prices.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

American Institute For Economic Research

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AIER educates Americans on the value of personal freedom, free enterprise, property rights, limited government and sound money. Our ongoing scientific research demonstrates the importance of these principles in advancing peace, prosperity and human progress. www.aier.orgFounded in 1933, AIER is a donor-based non-profit economic research organization. We represent no fund, concentration of wealth, or other special interests, and no advertising is accepted in our publications. Financial support is provided by tax-deductible contributions, and by the earnings of our wholly owned investment advisory organization, American Investment Services, Inc. (http://www.americaninvestment.com/)

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