Market Week: September 20, 2021

Inflation is Getting Worse and the Bad News Outweighs the Good – By a Lot

On Tuesday, the Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers increased 0.3% in August on a seasonally adjusted basis after rising 0.5% in July. Over the last 12 months, the All Items index increased 5.3%.

A few highlights:

  • The indexes for gasoline, household furnishings and operations, food, and shelter all rose in August and contributed to the monthly all items seasonally adjusted increase.
  • The energy index increased 2.0%, mainly due to a 2.8% increase in the gasoline index.
  • The index for food rose 0.4%, with the indexes for food at home and food away from home both increasing 0.4%.

Here is some good news on the monthly increases (maybe):

  • The index for dairy and related products declined in August, falling 1.0% after rising in each of the previous 4 months.
  • There was a sharp decline in the index for food at employee sites and schools, which fell 17% in August.
  • The index for airline fares fell sharply, decreasing 9.1% over the month.
  • The index for used cars and trucks declined 1.5% in August, ending a series of five consecutive monthly increases.

And here is some good news on the annual increases (maybe):

  • The all items index rose 5.3% for the 12 months ending August, a smaller increase than the 5.4% rise for the period ending July.
  • The index for all items less food and energy rose 4.0% over the last 12 months, also a smaller increase than the period ending July.
  • The prescription drugs index fell 2.7%, one of the few indexes to show a 12-month decline.

Bad News Outweighs the Good – By a Lot

Unfortunately, there is much more bad inflation news versus good, as the table below reveals.

More Data Later in the Week

More economic data will be released later this week, including MBA Mortgage Applications on Wednesday; Jobless Claims and Retail Sales on Thursday and Consumer Sentiment on Friday.

Click here to download a PDF of this report.