by Calculated Risk on 7/12/2023 08:59:00 AM

Here are a few measures of inflation:

The first graph is the one Fed Chair Powell had been mentioning when services less rent of shelter was up 7.6% year-over-year.  This has fallen sharply and is now up 3.2% YoY.

Click on graph for larger image.

This graph shows the YoY price change for Services and Services less rent of shelter through June 2023.

Services were up 5.7% YoY as of June 2023, down from 6.3% YoY in May.

Services less rent of shelter was up 3.2% YoY in June, down from 4.2% YoY in May.

Will services ex-shelter inflation be persistent, or will it follow a similar pattern as goods?   This is a topic I discussed in Pandemic Economics, Housing and Monetary Policy: Part 2.

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

Durables were at -0.8% YoY as of June 2023, down from 0.0% YoY in May.

Commodities less food and energy commodities were up 1.4% YoY in June, down from 2.0% YoY in May.

Goods inflation was transitory.

Here is a graph of the year-over-year change in shelter from the CPI report (through June) and housing from the PCE report (through May 2023)

Shelter was up 7.8% year-over-year in June, down from 8.0% in May. Housing (PCE) was up 8.3% YoY in May, down from 8.4% in April.

The BLS noted this morning: "The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the index for motor vehicle insurance also contributing."  Asking rent increases have slowed sharply, and these measures of shelter will continue to decline.