The BLS released the CPI report this morning so let’s take a look. The chart below was generated by AI. The green areas note positive (lower) changes and the red areas note higher (negative) changes to inflation. All values are year over year.
All items saw steady increases from August 2023 through February 2024, ranging from 0.1% to 0.5%, culminating in a 3.2% rise over the 12 months ending in February 2024.
Food experienced slight but consistent growth, with the month of February 2024 showing no change (0.0%), leading to a 2.2% increase over the year.
Energy had significant fluctuations, with a notable decline from October to December 2023, highlighted by a -2.1% to -0.2% change, then a sharp increase in February 2024 (2.3%), resulting in a -1.9% change over the year.
Energy commodities and Gasoline (all types) showed a similar trend to Energy, with a sharp drop, particularly in October and November 2023, and a strong rebound in February 2024. The 12-month change for Energy commodities was -4.2%, and for Gasoline, it was -3.9%.
Fuel oil witnessed the most significant monthly decrease in October 2023 (-6.4%) but saw a smaller increase in February 2024 (1.1%), ending the year at -5.4%.
Energy services generally increased, especially from November 2023 to February 2024, with a slight overall gain of 0.5% over the year.
Electricity and Utility (piped) gas service showed contrasting trends; Electricity increased steadily to a 3.6% annual gain, whereas Utility gas saw a decrease of -8.8% over the year, with notable declines in September 2023 and February 2024.
All items less food and energy consistently increased, ending the year at a 3.8% rise.
Commodities less food and energy commodities mostly saw declines in the latter months of 2023, but ended slightly down at -0.3% over the year.
New vehicles had minimal fluctuations with a slight overall annual increase of 0.4%.
Used cars and trucks experienced significant decreases, especially in September and January, ending the year at -1.8%.
Apparel, Medical care commodities, Services less energy services, Shelter, Transportation services, and Medical care services mostly experienced increases, with Transportation services leading at a 9.9% increase over the year.
If the Fed plans on cutting rates at their next FOMC meeting on March 20 then it’s likely inflation will continue to climb back up. If the Fed doesn’t cut then the cost of lending will remain relatively higher and that won’t help the frozen commercial or residential real estate markets. It’s clear to us that we need to maintain our T-bill buying until we have a new paradigm.
The Fed is in a tough spot and we’re eager to know what comes next so stay tuned, stay profitable and stay solvent.
[…] Fed meets on March 20th so it will be interesting to see how they view the hot CPI and hot PPI report that have come out recently. We will continue to load up on T-Bills and wait […]