The BLS says the CPI is up 0.1% for the month and 2.1% from a year ago. What’s the real story?

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.1 percent before seasonal adjustment.

An increase of 0.4 percent in the shelter index accounted for almost 80 percent of the 1-month all items increase. The food index rose in December, with the indexes for food at home and food away from home both increasing. The energy index, which rose sharply in November, declined in December as the gasoline index decreased.

Percent Change CPI Items

Despite energy commodities rising 10.8% the CPI is only up 2.1% year-over-year, assuming of course you believe the numbers. I find most of them believable.

What’s Believable?

Some readers may dispute this, but the price of food at home has been stable.

I have done nearly all our grocery shopping for my entire life and I worked on grocery stores from 1968-1972. I know what food prices were on sale then and I know what they are now. My judgment is based mainly on meat and cheese prices which make up the bulk of our food bill.

I by few snacks and few prepared or frozen foods. I do not buy milk or cereal. We tend to have meat or fish with a salad. Those buying packaged goods or organic vegetables may see things differently.

Energy commodities are easily measured so those prices rate to be accurate.

New and used cars down and apparel down are all believable.

What’s Not Believable?

?Given reported health care premium increases, I find medical care expenses mostly a joke.

Shelter at plus 3.2% is a proven joke. The Case-Shiller National Home Price Index is up 6.2% in the last year.

At one time, the CPI incorporated actual home prices but now it doesn’t. Homes are considered capital investment.