CPI Issue Won’t Be Fixed Quickly

CPI came out at 8.6% today year over year. This was higher than expected. Believe it or not, the real issue isn’t gas prices. The real issue is that inflation is becoming engrained in the economy.

I’ve posted this before, but here is CPI broken down over the last 17 months. The left column is CPI. The middle is the part that comes from used cars and transportation. The right is what’s left over. Like Shelter. Food. Etc.

When inflation first started spiking, non-transportation CPI was well under 2%. However, now we can see it’s close to 5% and rising every month.

Given things like Shelter has a looong way to go before it peaks, CPI will continue to be a problem for the market. Which means the Fed is going to be an issue going forward.