Settlement risk: y/y Inflation indicators: services, goods and housing

To Estimated risk per 03/14/2023 09:07:00

Here are some indicators of inflation:

The first chart is the one Fed Chairman Powell mentioned.

Click on the graph to enlarge the image.

This graph shows the year-on-year price change for services and services less housing rent through February 2023.

Services grew by 7.6% y/y as of February 2023, unchanged from 7.6% y/y in January.

Services less rental housing rose 6.9% year on year in February, compared with 7.2% year on year in January..

Will inflation in services without housing be sustainable, or will it follow the same pattern as goods? This is the topic I discussed yesterday The Pandemic Economy, Housing and Monetary Policy: Part 2.

The second chart shows that commodity prices started to rise year-over-year (YoY) in 2020 and accelerated in 2021 due to both strong demand and supply chain disruptions.

Long-term goods were at -1.8% y/y as of February 2023 compared to -1.3% y/y in January.

Goods excluding food and energy rose 1.0% y/y in February from 1.3% y/y in January.

Commodity inflation was temporary.

Here is a graph of the change in housing compared to last year from the CPI report (to February) and housing from the PCE report (to January 2023)

The shelter rose 8.1% year on year in February compared to 7.9% in January. Housing (PCE) rose 8.0% year on year in January.

The BLS noted this morning: “The Housing Index has contributed the most to the monthly increase of all items, accounting for over 70 percent of the increase. [in CPI]”.