by Martin Armstrong
Armstrong Economics
The numbers are in, and the Consumer Price Index fell to 2.3% this April annually, down from March’s 2.4% reading, according to the Bureau of Labor Statistics. April’s reading is the lowest since February 2021.
Shelter costs drove more than half of all items monthly, increasing by 0.3% on a monthly basis, and 4% annually. The energy index experienced a 0.7% increase from the month prior, slightly offset by a decrease in gas (-0.1% monthly; -11.8% annually), fuel oil (-1.3% monthly; -9.6% annually), and energy commodities (-0.2% monthly; -11.5% annually). Electricity rose 0.8% monthly and is up 3.6% for the year, while piped utility advanced 3.7% and is up an alarming 15.7% annually.
Yes, shelter is included in the CPI, but it’s not real-time, and it’s not accurate. The way they calculate shelter is through something called Owner’s Equivalent Rent. It’s based on what homeowners think they would charge to rent their homes, not what people are actually paying in the real world. They consider the actual purchase of real estate an investment, and therefore, that does not go on the CPI report. actual rents and home prices have surged because of artificially constrained supply, institutional buyers, and rising taxes. So the CPI gives a watered-down version of housing inflation.