May 12, 2021
This is a compilation of Dean Baker’s quick-take analysis of the monthly Consumer Price Index (CPI) over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.
Overall, this story is largely as predicted. There was a major bounce back in areas like airfares, car insurance, and hotels (up 8.8 percent). A temporary shortage led to a surge in used car prices and an unusual hike in new car prices. There is little basis for concern about lasting inflation.
-
The overall CPI was up 0.8 percent in April; the core CPI was up 0.9 percent, driven largely by bounce-back items in temporary short supply. For instance, used cars jumped 10.0 percent.
-
The overall CPI is up 2.6 percent since February 2020, a 2.19 percent annual rate. Core CPI is up 3.1 percent, a 2.7 percent annual rate.
-
A jump in used car prices added 0.28 percentage points to the overall inflation rate in April and 0.35 percentage points to core inflation.
-
New vehicle prices rose 0.5 percent in April, up 2.0 percent year-over-year. This is due to strong demand and a semiconductor shortage.
-
Car insurance jumped 2.5 percent in April, reflecting more driving. This added 0.04 percentage points to core inflation. The price is up 6.1 percent year-over-year but still below its February 2020 level.
-
Medical care service prices were unchanged in April, up just 2.2 percent year-over-year. No problems are seen in this traditionally troubled area.
-
Prescription drug prices rose 0.5 percent but are still down 1.9 percent year-over-year.
-
Both rent proper and owners equivalent rent rose just 0.2 percent in April, up 1.8 percent and 2.0 percent, year-over-year, respectively.
-
College tuition rose 0.1 percent, up 0.3 percent year-over-year.
-
Airfares jumped 10.2 percent in April. That’s up 9.6 percent year-over-year but still well below the February 2020 level.
-
Prices for restaurants were up just 0.3 percent in April and less than 0.4 percent for store-bought food. Food-at-home prices were up just 1.2 percent year-over-year, but there was a big jump in April of 2020.
- Restaurant prices (up just 0.3 percent in April) are supposed to be ground zero for the labor shortage (wages did jump in April). If there is anywhere excess demand should be causing inflation, it’s restaurants. For now, it isn’t.
