Overall CPI Up 0.9 Percent in June Driven by Bounce Back and Cars

07/13/2021 12:00am

The real story for June remains cars and bounce back. Cars alone account for more than half of inflation. A big jump in car and energy prices pushes the core and overall CPI up 0.9 percent in June.

  • Rising car and insurance prices account for more than 0.5 percentage points of the 0.9 percent rise in core inflation in June.
  • Car insurance, which accounts for almost 2.0 percent of core CPI, jumped 1.2 percent in June, reversing pandemic declines.
  • The 1.2 percent rise in car insurance prices will have a much lower impact on the personal consumption expenditure (PCE) deflator than the CPI. It used a net measure of insurance (premiums paid, minus payouts). The CPI just measures premiums.
  • In the same vein, medical care, the price of which actually fell in June, has more than twice the weight in the PCE.
  • The medical care index fell 0.1 percent in June, up just 0.4 percent over the last year.
  • Inflation in rent and owners’ equivalent rent both remain contained, 0.2 and 0.3 percent, respectively. 
  • Inflation in lodging away from home jumped 7.0 percent in June, reversing earlier declines.
  • The 7.0 percent June jump in hotel prices puts them 2.1 percent above the February 2020 level, a 1.5 percent annual rate of increase. The 0.7 percent rise in apparel leaves prices 1.7 percent below the February 2020 level.

This is a compilation of Dean Baker’s quick-take analysis over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.

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