Thread by @MBjegovic

Without seasonal adjustments there are many things to cheer for with Sep #CPI report.

3MA #CPI unadjusted is only +0.06%, the lowest since Dec 2020! (+0.02%).

3MA is even lower than in Mar 2020 when the #Fed started the latest QE.

Details follow in a thread.

1/9

https://twitter.com/MBjegovic/status/1580539765337645056

1) Food decelerated a bit to +0.7% MoM from +0.8% in Aug
2) Energy a bit slower downward than one would expect due to unexpectedly higher gas prices (+2.6% vs -10.6% Henry Hub Natural Gas Spot Price - this would need to be reflected in Oct)
3) Core mixed but positive bias

2/9

ONLY 2 categories with faster MoM #inflation:
a) Apparel (surprising rise from +1.7% in Aug to +2.2%) and
b) Transportation Services (decline in airline fares ended which couldn't offset faster vehicle maintenance and insurance #inflation - trans.serv. +1.7% vs -0.2% in Aug)

3/9

ALL core categories except apparel and transportation services, had lower MoM #inflation (some even went negative) with the exception of shelter that was flat.

Shelter with 32% of the #CPI still has long way to go to reflect the real rent data:

https://twitter.com/MBjegovic/status/1577446184263860224?s=20&t=DwuVizg7ZfC_7if3EwtgCQ

4/9

So out of 11 #CPI categories ONLY 2 had faster MoM #inflation than Aug. Other core components:
c) New vehicles +0.4% MoM vs +0.6% in Aug
d) Used cars and trucks are deflating with massive -4.2% MoM decline vs -0.4% in Aug. This will likely persist in the following months

5/9

e) Medical care commodities deflated -0.1% MoM vs +0.2% in Aug
f) Alcoholic beverages +0.1% MoM vs +0.5% in Aug
g) Tobacco +0.2% MoM vs +1.1% in Aug
h) Medical care services +0.7% MoM vs +0.8% in Aug

6/9

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7/9

To recap:
1) #CPI missed expectations solely bc of seasonal adjustments. Unadjusted headline was in line (+0.2% MoM), while core was better than expected (+0.4% MoM
2) Unadjusted 3MA #CPI #inflation (+0.06%) is almost non-existent and lower than Mar 2020 when the #QE started

8/9

3) Only 2 out of 11 #CPI categories had higher MoM #inflation than in Aug and these are apparel and transportation services
4) Shelter remained the same as in Aug (+0.7%), while all other components had lower #inflation than in Aug

9/9