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.