Notes on Inflation

No Escape
Rates Still Negative
LNG Boom
Manufacturing Moves
No Soft Landing
“This Is Normal Now”
What Will Jerome Do?
Fiona and Floods

We were a bit preoccupied here in Puerto Rico this week. Hurricane Fiona decided to camp out over the island, bringing mind-boggling amounts of rain. I am sure you have seen the flooding pictures. The entire island lost power and much of it is still down. Our oversized diesel generator, which I thought quite expensive but decided to get anyway, proved a good investment.

For today’s letter my team and I pulled together some brief notes on the less obvious aspects of our inflation wave. I think you’ll find them interesting, and in some cases surprising. At the end we’ll also talk about the Federal Reserve’s latest policy meeting.

No Escape

Price inflation is an individualized experience based on your spending patterns. It is increasingly difficult to escape completely, though. Almost every category of living costs is rising to some degree. You can see it in these charts from my friend Liz Ann Sonders of Charles Schwab.

Source: Liz Ann Sonders

The food component of CPI just posted its biggest annual jump since 1979.

Source: Liz Ann Sonders

Last week I talked about rent increases driving service prices higher. That’s not the only problem. Services ex-rent are growing even faster.

Source: Joseph Politano

These other services carry less weight in the CPI formula, so their impact is smaller. As we’ll see, though, they add up, particularly for those with chronic health conditions. Treatment services are expensive and getting more so.