Annual Inflation Soars to Highest Level in 31 Years

The Annual Inflation Rate exploded in October, according to the Bureau of Labor Statistics report.

Inflation Summary:

Annual Inflation highest since October 1990.
CPI Index rose from 274.310 to 276.589.
Monthly Inflation for October was 0.83%
Next release December 10^th

Inflation for the 12 months ending in October was Up Sharply from September.

September 5.39% October 6.22%

Current levels have exploded through the pink resistance line. Exceeding the 5.60% Oil Peak of July 2008, and coming very close to the October 1990 peak at 6.29%.
If next month takes it up even slightly we will have to go all the way back to 1982 to see higher inflation.

BLS Commissioner’s Inflation Report:

According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in October on a seasonally adjusted basis after rising 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.2 percent before seasonal adjustment. The monthly all items seasonally adjusted increase was broad-based, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors. The energy index rose 4.8 percent over the month, as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. The food index increased 0.9 percent as the index for food at home rose 1.0 percent. .”

Seasonally Adjusted Inflation Components Table

Key components are the increase in Gasoline prices which increased 6.1% over the last month and 49.6% over the last year. Used Cars and Trucks were also up 26.4% over year-ago prices. Food was up 5.3% over year-ago prices.

See: From Pandemic To 2021 Supply Chain Disruption for more information. We’ve also updated the Inflation Adjusted Corn prices chart.

October 2021 Inflation Situation

The Current Annual inflation Rate for the 12 months ending in October was 6.22% significantly above September’s 5.39%.

August was 5.25%, July was 5.37%, June was 5.39%. This followed the run-up from December 2020’s 1.36%. So inflation is much more than QUADRUPLE last December’s rate.

Monthly Inflation:

October’s monthly inflation was a massive 0.83%, compared to 0.04% in October 2020. Typically, October – December have extremely low (or even negative) monthly inflation so having a massive number like this is indicative of a shift toward much higher annual inflation.

See Annual Inflation for more information.

Moore Inflation Predictor

In March, we changed the projection model due to the FED’s pronouncements. FED chairman Jerome Powell insisted that inflation would not be a problem, i.e., that the spike was only “transitory”. So rather than using the extreme high (winter months projection numbers) we had been using, we switched back to “normal” Summer and Fall projections. But we added an additional line to project what was possible if the FED’s pronouncement was wrong. And even that number was too low for October’s projection but looking at the longer term we can see that our July projection (based on June data) looks pretty good now.

See our Moore Inflation Predictor for this month’s projection.

Not Seasonally Adjusted Monthly Inflation Rates

As we can see from the table below, the monthly numbers for the 4th quarter of 2020 are very low. If 2021 numbers come in above those numbers, the annual inflation rate will rise.

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2016	0.17%	0.08%	0.43%	0.47%	0.41%	0.33%	(0.16%)	0.09%	0.24%	0.12%	(0.16%)	0.03%
2017	0.58%	0.31%	0.08%	0.30%	0.09%	0.09%	(0.07%)	0.30%	0.53%	(0.06%)	0.002%	(0.06%)
2018	0.54%	0.45%	0.23%	0.40%	0.42%	0.16%	0.01%	0.06%	0.12%	0.18%	(0.33%)	(0.32%)
2019	0.19%	0.42%	0.56%	0.53%	0.21%	0.02%	0.17%	(0.01%)	0.08%	0.23%	(0.05%)	(0.09%)
2020	0.39%	0.27%	(0.22%)	(0.67%)	0.002%	0.55%	0.51%	0.32%	0.14%	0.04%	(0.06%)	0.09%
2021	0.43%	0.55%	0.71%	0.82%	0.80%	0.93%	0.48%	0.21	0.27	0.83%

See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.

Federal Reserve Actions

The FED refused to commit to cutting back at their most recent meeting.

Despite the increase in inflation, the FED has announced that it won’t be tapering off its money printing until sometime next year. And tapering doesn’t even mean reducing assets, it only means printing slower. So it seems rather certain that inflation will continue. Looking at total assets, we can see the same stairstep pattern we’ve been seeing for the last year.

See NYSE ROC for more info.

FED Funds Rate

As a matter of fact, they actually lowered the FED funds rate, albeit a minuscule 1/100% to 0.08% in September and it remained there in October.

Chart Source St Louis FED.

For more info, See NYSE ROC and MIP.

Misery Index

The misery index rose. Even though unemployment was down, inflation was up more than unemployment was down.

[Read More…]

Inflation-Adjusted Price of Corn

We’ve updated the inflation-adjusted price of corn chart.

See: Inflation-Adjusted Price of Corn

NYSE ROC

Sell or Hold? Signal

The NYSE ROC index is up but still below its moving average.

See the NYSE ROC for more info.

NASDAQ ROC

Sell Signal

The NASDAQ ROC, up but still well below its moving average.