Latest Inflation Numbers and Discussion

[GenXguy]

Apparel prices and home furnishings are both still going up per BLS and from my own experience, including in June. You are far too confident in your deflation forecast

Yeah, it's pretty much across the board - pretty much everything keeps going up. And a lot of people are confused. If inflation eventually drops, that doesn't mean all prices will go back down as the media and some politicians lead people to beleive, it just means they won't skyrocket as quickly as they are now. But even if we returned to 2% inflation, that means prices will actually continue to increase. Of course, there will be some things that come down in price. Just like gas prices, I can get gas for 6 cents per gallon less than the recent peak. But everything else is costing me more. That 6 cent savings on gas is insignificant in my budget compared to the increases for everything else. I'm sure I'm not alone in that. On balance, be prepared to keep paying higher prices.

 

[Koolau]

Yeah, it's pretty much across the board - pretty much everything keeps going up. And a lot of people are confused. If inflation eventually drops, that doesn't mean all prices will go back down as the media and some politicians lead people to beleive, it just means they won't skyrocket as quickly as they are now. But even if we returned to 2% inflation, that means prices will actually continue to increase. Of course, there will be some things that come down in price. Just like gas prices, I can get gas for 6 cents per gallon less than the recent peak. But everything else is costing me more. That 6 cent savings on gas is insignificant in my budget compared to the increases for everything else.

True. Even the 40 cents less I'm paying now vs at the peak of gas prices is almost nothing compared to all the other items which are 10 to 25% higher than they were this time last year. I think this inflation is here for a while. YMMV

 

[pb4uski]

There was no way we would have seen 4%. They would have been celebrating with a 8.4% print.

+1 anyone expecting 4% was delusional... 4% was never a realistic possibility.

 

[Teacher Terry]

Yesterday I went to Walmart to pick up my prescriptions and there’s clothes everywhere marked down to super cheap prices and the store is a mess with racks of clothes everywhere. I have never seen that many clothes in a store so cheap.

 

[Bigdawg]

What do we expect the fed number will be this month? .5%, .75% or 1% Rate increase?

My bet is .75%. 1% would not surprise me too much. I would be in total shock if it is .5%

 

[aja8888]

1.0% is my guess.

 

[Freedom56]

Today I went to Lowes to buy some lumber. There was plenty of supply and a near empty store. Prices are back to pre-pandemic levels but they are not moving that much stock. The store manager who I have known for since 2008 said that very few people are buying building supplies and their distributors have excess inventory. The price crashes are coming.

 

[aja8888]

Today I went to Lowes to buy some lumber. There was plenty of supply and a near empty store. Prices are back to pre-pandemic levels but they are not moving that much stock. The store manager who I have known for since 2008 said that very few people are buying building supplies and their distributors have excess inventory. The price crashes are coming.

The Home Depot near us has enough patio blocks, mulch, stones, pressure treated wood, etc for outdoor projects that they had to use part of the parking lot to store the excess inventory. And it's not moving.

 

[almost there]

Anything less than a 1% increase will do nothing. As it will take 3-4% more to make any real impact. How long they stretch it out, is up to them. 1st sign of a recession, and they will cut rates. Its almost a joke now how they operate these days...

 

[plex]

Inflation is outpacing their rate increases...so if they don't increase even faster, they can expect stagflation to just continue to get worse. This is probably a big part of why the yield curve is starting to invert again, and even more strongly than 2008, the Fed is late and is reacting too slowly even now. Of course, we will eventually reach an equilibrium point and go the other way, but they need to get these rate increases over with so that we can go back to a recovery sooner.

 

[milford]

High inflation is not going away anytime soon... there has been signs of some cracks in durable goods (i.e. clothing, housing supplies, sporting equipment, etc...) however services (hotels, airfare, health care, etc...) has skyrocketed in the past 6 months. It should be an easy decision for the fed to raise the rate to at least 1% coming up.

 

[GenXguy]

Yesterday I went to Walmart to pick up my prescriptions and there’s clothes everywhere marked down to super cheap prices and the store is a mess with racks of clothes everywhere. I have never seen that many clothes in a store so cheap.

I was just out there. I did see racks of clothes on clearance, like marked down from $13 to $9 on select merchandise, t-shirts from $5 down to $4. It was not a mess at our Walmart, though, and most of the clothes were still regular price. I'm not needing any clothes, so not a help to me. When I went over to grocery, I saw more price increases.

 

[Car-Guy]

The Home Depot near us has enough patio blocks, mulch, stones, pressure treated wood, etc for outdoor projects that they had to use part of the parking lot to store the excess inventory. And it's not moving.

Hopefully that applies to cinder blocks too... I have a need for about 750 of them for a fall project but I'll buy now if I can catch a good deal.

 

[USGrant1962]

PPI (aka wholesale inflation) was up 11.3% yoy in June.

 

[Magus]

Remember all bubbles collapse. We had $4 trillion injected into the economy in 2020 followed by $1.8 trillion in 2021. People stayed at home and saved money which is abnormal behavior for the 67% in this country that live paycheck to paycheck. As the economy opened up, they went on their massive buying binges. Prices of everything surged and corporations took advantage of the surge in demand. The stock market became a casino and still is. Look at the price of GameStop today. Crypto was the rage. We have all seen this movie before in 2000 and like then this bubble will take years to unwind. You only have to look back at the so called energy crisis of 2000 where Enron traders manipulated the market to create a crisis that never existed. Over the past year, traders/speculators with fresh money have manipulated the entire commodity futures complex driving prices up. But it's all headed for a hard landing. The CPI reports are a look into the rear view mirror and heavily biased by housing/shelter costs. Commodity prices are collapsing and this is a fact. Eventually this will be reflected in future reports. What happened to the talk about $6.20 gas by the end of the summer? The crude oil bubble is collapsing. It doesn't take a genius to understand that when you have one supplier discounting oil by 30% it puts pressure other suppliers as their customers abandon them and buy the discounted oil. All bubbles pop and there will be no exceptions this time.

Money printing is not a bubble, it’s inflation

 

[almost there]

whoops-a-daisy

 

[Magus]

Well to be fair, there are some negative numbers in these areas. The problem is they suffer from base effect when compared to last year. Smartphones and TVs and Men's suits are good examples. 18 months ago, the electronics skyrocketed due to the stay at home thing. Everyone got what they needed so they are now going down. Men's suits, however, have skyrocketed this last year because they were cratered during the height of the pandemic.

These items are just a tiny portion of the CPI. The real issue is shelter (a huge element of CPI), and that's going to take another year to unwind due to the way it is measured.

Apparels as a whole were up 0.8% in June on top of a 0.7% in May. Home furnishings were up 0.4%. Agree on shelter lifting inflation for a long time.

 

[NW-Bound]

The Home Depot near us has enough patio blocks, mulch, stones, pressure treated wood, etc for outdoor projects that they had to use part of the parking lot to store the excess inventory. And it's not moving.

Speaking of pressure treated wood, yesterday I was surfin' HD and Lowes' Web sites to see what they offered for me to build another structure for more ground-mounted solar panels in my back yard. Saw some very meager offerings.

After seeing your post, I went back to look just now. Lo and behold, HD now has a lot more. I guess they finally got around to update their Web pages, or perhaps the shipment just arrived.

Prices are not cheap though.

 

[Lakedog]

Speaking of pressure treated wood, yesterday I was surfin' HD and Lowes' Web sites to see what they offered for me to build another structure for more ground-mounted solar panels in my back yard. Saw some very meager offerings.

After seeing your post, I went back to look just now. Lo and behold, HD now has a lot more. I guess they finally got around to update their Web pages, or perhaps the shipment just arrived.

Prices are not cheap though.

Although down considerably from the highs, lumber futures are still almost double pre-pandemic levels. Hopefully prices will continue to drop if demand stays low for a few more months.

 

[John Galt III]

Today I went to Lowes to buy some lumber. There was plenty of supply and a near empty store. Prices are back to pre-pandemic levels but they are not moving that much stock. The store manager who I have known for since 2008 said that very few people are buying building supplies and their distributors have excess inventory. The price crashes are coming.

My Lowes has huge stacks of stuff in the parking lot, too! The only thing I want from them these days is split rail fencing. One 11 foot rail was $18.00 six months ago. Two years ago they were $13 each. Afraid to look lately, but you got mu hopes up! May have to go check it out, ha ha. Come on, price crash ! I am ready.

 

[JoeWras]

Although down considerably from the highs, lumber futures are still almost double pre-pandemic levels. Hopefully prices will continue to drop if demand stays low for a few more months.

Yes, they certainly are not at pre-pandemic levels.

I'm glad to finally see some movement in OSB products. The flooring we use a lot was $25 pre-pandemic, reached a high of $85 in the middle of the madness, and now is about $55. EDIT: it was $55 on Monday and has been reduced to $51 today. Wooo!

One thing I noticed is pressure treated lumber has come down more than interior framing lumber. I guess the big DYI deck rebuilding boom is over.

 

[John Galt III]

Yeah, it's pretty much across the board - pretty much everything keeps going up. And a lot of people are confused. If inflation eventually drops, that doesn't mean all prices will go back down as the media and some politicians lead people to beleive, it just means they won't skyrocket as quickly as they are now. But even if we returned to 2% inflation, that means prices will actually continue to increase. Of course, there will be some things that come down in price. Just like gas prices, I can get gas for 6 cents per gallon less than the recent peak. But everything else is costing me more. That 6 cent savings on gas is insignificant in my budget compared to the increases for everything else. I'm sure I'm not alone in that. On balance, be prepared to keep paying higher prices.

ANother thing people get wrong is that they think 8% CPI is monthly. They think inflation was 8% up from last month. In reality it would be up zero percent over last month, if the CPI (annual) were 8% for June and also 8% for July. But 'zero percent' monthly inflation isn't a sexy headline, I guess.

 

[almost there]

Here is one for those who do not see inflation. "372% surge in lumber prices during the past two years"

"Lumber futures have declined 33% since May 7, which likely reflects a mix of falling demand as contractors—shaken by the 372% surge in lumber prices during the past two years—back off potential projects and the slow but steady return of supply."

 

[Gumby]

ANother thing people get wrong is that they think 8% CPI is monthly. They think inflation was 8% up from last month. In reality it would be up zero percent over last month, if the CPI (annual) were 8% for June and also 8% for July. But 'zero percent' monthly inflation isn't a sexy headline, I guess.

Not quite. Inflation is normally reported on a year over year basis. So if prices were climbing last year from June to July, even if inflation was reported at 8% for both June and July of this year, prices still went up, because the base from which those two 8% numbers are measured is different.

The best way to determine the month to month inflation is to use the CPI-U. In May 2022, it was 292.296 In June 2022, it was 296.311. Therefore, prices inflated by 1.37% from May to June 2022. And next May and June (2023), if inflation were reported at 8% for each month, it would mean that prices actually went up 1.37% that month.

BTW, if prices continued to climb at that monthly rate for a full year, they would increase by 17.78% (1.0137 ^12 = 1.1778).

 

[Fermion]

The Home Depot near us has enough patio blocks, mulch, stones, pressure treated wood, etc for outdoor projects that they had to use part of the parking lot to store the excess inventory. And it's not moving.

They still want $40 for CDX 19/32 plywood which is still way above pre-pandemic levels of ~$18 a sheet.