PREVIEW: What to Look for in the September Consumer Price Index

October 12, 2021

(The monthly Consumer Price Index (CPI) is scheduled for release by the Bureau of Labor Statistics on Wednesday, October 13th at 8:30 AM Eastern Time.)
The monthly inflation readings had been trending down the last two months, with August showing a 0.3 percent rise in the overall inflation rate and just a 0.1 percent rise in the core index. These numbers were held down in large part by some anomalous price declines at least partly connected to the resurgence of the pandemic.

Airfares dropped 9.1 percent, hotel prices fell 3.3 percent, and the car insurance index declined 2.8 percent. These declines will not be repeated in September, which means we should expect a rise in the core index of around 0.3 percent.

Supply problems continue in many sectors. These problems are likely to lead to further price increases, or at least prevent price declines for items like cars, where shortages have led to large pandemic price rises.

The index for medical services, which had shown almost no inflation throughout the pandemic, rose 0.3 percent for the second consecutive month in August. The September data will provide some indication whether these price rises are an anomaly or whether health care is again an inflation problem area.

Rental inflation has remained remarkably tame, in spite of the sharp run-up in home sale prices. The CPI rent index also shows a much lower rate of inflation than many private indexes. Given the weight of rent in the CPI, the rate of inflation in this component will be a huge factor in the direction of inflation going forward.

One item that appears to not be a factor, is that it doesn’t seem we are getting the tsunami of evictions many had predicted with the end of the federal moratorium. Large-scale evictions would put downward pressure on rents, but thankfully this does not seem to be happening.

CEPR produces same-day analyses of government data on employment, inflation, GDP and other topics. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

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