Overall CPI Up 0.9 Percent in June Driven by Bounce Back and Cars

July 13, 2021

The real story for June remains cars and bounce back. Cars alone account for more than half of inflation. A big jump in car and energy prices pushes the core and overall CPI up 0.9 percent in June.

  • Rising car and insurance prices account for more than 0.5 percentage points of the 0.9 percent rise in core inflation in June.
  • Car insurance, which accounts for almost 2.0 percent of core CPI, jumped 1.2 percent in June, reversing pandemic declines.
  • The 1.2 percent rise in car insurance prices will have a much lower impact on the personal consumption expenditure (PCE) deflator than the CPI. It used a net measure of insurance (premiums paid, minus payouts). The CPI just measures premiums.
  • In the same vein, medical care, the price of which actually fell in June, has more than twice the weight in the PCE.
  • The medical care index fell 0.1 percent in June, up just 0.4 percent over the last year.
  • Inflation in rent and owners’ equivalent rent both remain contained, 0.2 and 0.3 percent, respectively. 
  • Inflation in lodging away from home jumped 7.0 percent in June, reversing earlier declines.
  • The 7.0 percent June jump in hotel prices puts them 2.1 percent above the February 2020 level, a 1.5 percent annual rate of increase. The 0.7 percent rise in apparel leaves prices 1.7 percent below the February 2020 level.

This is a compilation of Dean Baker’s quick-take analysis over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

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