Millennials Have Never Seen Inflation This High

The Bureau of Labor Statistics reported that the Annual Inflation Rate rose again in November.

Inflation Summary:

Annual Inflation highest since May 1982.
CPI Index rose from 276.589 to 277.948.
Monthly Inflation for November was 0.49%
Next release January 12, 2022

Inflation for the 12 months ending in November was Up again from October.

October 6.22% — November 6.81%

The earliest millennials were born somewhere between 1980-1985 (depending on which definition of millennial you use), just as we were coming off one of the highest Inflation spikes the U.S. has seen since they began tracking the CPI in 1913. In March of 1980, Inflation topped at 14.76%. By May of 1982, it had fallen to 6.9%, which was the last time inflation was higher than today’s 6.81%. Of course, there’s a big difference between the peak in 1980 and current levels, but as we discuss below, there is still the possibility that Inflation will climb higher from here.

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BLS Commissioner’s Inflation Report:

According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in November on a seasonally adjusted basis after rising 0.9 percent in October, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.8 percent before seasonal adjustment.

The monthly all items seasonally adjusted increase was the result of broad increases in most component indexes, similar to last month. The indexes for gasoline, shelter, food, used cars and trucks, and new vehicles were among the larger contributors. The energy index rose 3.5 percent in November as the gasoline index increased 6.1 percent, and the other major energy component indexes also rose. The food index increased 0.7 percent as the index for food at home rose 0.8 percent. “

Seasonally Adjusted Inflation Components Table

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But since we calculate it to two decimal places, this month’s Annual Inflation was 6.81%, and monthly Inflation on a NON-Adjusted basis was 0.49%. Note that monthly Inflation increased 0.8% on an Adjusted basis, but on a non-adjusted basis, it was “only” up 0.49%. That means that monthly Inflation in November was almost twice as high as is typical for November. As we have stated many times, October through December are usually VERY LOW inflation months, often negative, i.e., disinflationary, so at 0.49%, that is high for a November and more typical of January through May.

Key components of November’s increase were Gasoline prices which increased 58.1% over the last year, up 6.1% over the previous month. Used Cars and Trucks were also up 31.4% over year-ago prices. Food was up 6.1% 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.

November 2021 Inflation Situation

The Current Annual inflation Rate for the 12 months ending in November was 6.81% above October’s 6.22% and significantly above September’s 5.39%. This followed the run-up from December 2020’s 1.36%. So Inflation is currently 5X last December’s rate.

Monthly Inflation:

November’s monthly Inflation was 0.49%, compared to -0.06% in November 2020. Typically, October – December have extremely low (or even negative) monthly Inflation, so having a massive number like this indicates a shift toward much higher annual Inflation.

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See Annual Inflation for more information.

Moore Inflation Predictor

We changed the projection model in March 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 we added an additional line to project what was possible if the FED’s pronouncement was wrong. And even that number was slightly low for last month’s projection.

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%	0.49%

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

Federal Reserve Actions

Despite the increase in Inflation, the FED still isn’t tapering off its money printing. However, they have begun hinting that it is a possibility. But tapering doesn’t mean reducing assets, it only means printing slower. So it seems relatively inevitable that Inflation will continue. Looking at total assets, we can see the same stairstep pattern we’ve been seeing for the last year.

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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 through November.

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.

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[Read More…]

Sell Signal

The NYSE ROC index is down below its moving average.

See the NYSE ROC for more info.

Sell Signal

The NASDAQ ROC, down well below its moving average.

See NASDAQ ROC for more.

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Millennials Have Never Seen Inflation This High

Inflation Summary:

Inflation for the 12 months ending in November was Up again from October.

Seasonally Adjusted Inflation Components Table

November 2021 Inflation Situation

Moore Inflation Predictor

Not Seasonally Adjusted Monthly Inflation Rates