Finance, US News, Wall Street

On Inflation: Friday's 7% Increase In Consumer Prices Is 11% When House Prices Are Added

On Inflation: Friday’s 7% Increase In Consumer Prices Is 11% When House Prices Are Added

By Joseph Carson, former chief economist at AllianceBernstein

Consumer prices rose 0.8% in November, pushing the increase in the last 12-months to nearly 7%. That represents the most significant increase since 1982. But in reality, the current inflation rate is much higher than what is reported and above that of 1982.

The shelter component of the CPI, which has the most significant weight, increased 3.8% in the past year. That compares to a 7% to 9% increase at the highest point in 1982. But that is not an apples-to-apples comparison.

In 1982, the CPI shelter component included house prices for owners’ housing costs. But nowadays, the shelter component for owner’s housing is based on a non-market rent index. House prices are up close t0 20% in the past year versus a 3.5% increase in owners’ rent.

Adjusting today’s shelter measure for the rise in house prices and removing the owner’s index would result in a significant boost to the reported inflation rate. Based on my calculation, todays’ inflation rate would top 11%.

Bill Ackman agrees

 

Tyler Durden
Sun, 12/12/2021 – 11:30

Jump To The Original Source

Facebook Comments

Check Also

Google To Replace Third-Party Cookies With Topics API Browser Approach

Google  – Alphabet Inc (NASDAQ:GOOGL) is testing a ...

Archives