May recap II
Part II of II
This post is Part II of a two-part recap of Dotdat’s real-time CPIs over May.
As reviewed in Friday’s post, the 30k-foot view is the acceleration in the all-important Transportation CPI (official print of -0.4 percent in April SA, 0.90 percent NSA) as gasoline prices accelerate, new vehicles and auto insurance inflation continue recent trends of ~ 1-percent monthly inflation run rates, and despite airfares inflation coming off its blistering April pace of ~ 20 percent down to single digits for May (SA).
We remain cautious about our Airfares CPI given the relatively small size of the BLS’s sample, its on-again, off-again sampling of airfares across most cities, and the current “weirdness” in airfare algorithmic pricing that has reportedly caused a deterioration in the performance of airfare prediction engines (e.g. Google Flights, Hopper).
We see Services CPIs softening relative to April—as rising Airfares CPIs was a key driver of elevated services inflation over the month—but otherwise continuing April monthly run rates, notably in Medical Care and Shelter.
For general merchandise inflation across categories (mainly Apparel, Housing, and Recreation goods), retailers appear to be ending the deep discounts of late Q1/early Q2 with inflation returning to more normal monthly price trends consistent with low-single-digit inflation—for items like furniture, electronics, and apparel. This means starting to see a recovery from the weakness in Apparel, Housing, and Recreation goods we observed in March and April in our data—and in some official prints in April.
We expect recent trends in Eduction/Communication, Medical Care, and FoodnBev to continue. Seasonal adjustment will give the illusion of declining prices in Fresh Fruit and Vegetables, but our data show NSA prices remaining at current levels or continuing to rise for this and other “Food at home” items.
Dotdat’s real-time Shelter CPI uses asking rents for vacant apartments and houses to build a simple measure of Shelter inflation that includes both the ‘Rent of primary residence’ and ‘Owners equivalent rent’ categories. Over the past couple of months the real-time Shelter inflation has been fairly steady in the low to mid 40s, a trend that continued through May, with a final print for the month of 0.41 percent, in line with April’s 0.40 percent number.
Food away from home
In the “Food away from home” category, the item with the largest weight is “Limited service meals and snacks”, defined by the BLS as “Food and non-alcoholic beverages purchased at establishments where patrons generally order and pay at the register before eating.” It includes take-out, delivery, or eating on the premises.
Dotdat’s real-time CPI matched the official data fairly well over the past few months which appeared range bound around about a 0.1 percent monthly inflation rate, with May coming it just at the mean at 0.1 percent as of May 31.
For general merchandise items across the BLS’s major groups, we see similar trends that we illustrate via a few expenditure level items (ELIs).
A good example of Housing merchandise trends, Dotdat’s real-time “Major Appliances” CPI declined in early Q2, falling from early April into May. Its monthly print was -0.8 percent for April (annualized run rate, -9.6 percent). As of May 31st it has shown signs of a reversal, with Dotdat’s monthly print for May at -0.2 percent.
Dotdat’s real-time Toys CPI is a typical item in Recreation merchandise. Its real-time price index generally runs about one month ahead of the official data. It also declined precipitously, though in Q1. As shown in the figure, its price index began to rise again by late March and accelerated modestly into late April then softening in early May, with Dotdat’s real-time print for the month at 0.2 percent, slightly softer than April’s 0.4 percent print.
An apology for the publication delay for this note—following some travel disruptions to and from a college reunion. Until Friday!
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