Inflation in November: the same story
The same expenditure categories continue to dominate inflation headlines
It happened as I wrote that it would: the Inland Empire reported another high inflation reading in November, at 7.9%. This is a year-over-year inflation rate, between November 2020 and November 2021. You can see the latest numbers here (for the IE) and (for all metro areas, including the IE) here.
This was one of the highest metro-area inflation readings. Tampa-St. Petersburg reported an 8.0% inflation rate, which is only 0.1 percentage points under the Inland Empire. Dallas-Ft. Worth reported a 7.5% rate. Last month, Atlanta reported a 7.9% rate just like us (many metro areas only report inflation once every other month), but nowhere was higher than that.
Rather than raise alarm, I want to answer a question about it: are the same factors driving inflation today?
Last month (well technically, September), we had a 6.8% inflation rate. This month, it’s 7.9%. Why does inflation continue to accelerate? Here is a breakdown of inflation by major expenditure category, for November vs. September 2021:
Two things are clear from this chart:
Transportation, which represents about 16% of the IE resident’s budget (new and used cars, gas, repairs, etc.), continues to dominate the headline rate, as it does nationally
Housing, representing over 40% of the IE resident’s budget (rent, furnishing, utilities, etc.), also accelerated in November
You can ignore changes in smaller series like Apparel because they represent a very small portion of a consumer’s budget. But the interesting thing about Transportation and Housing is that their prices were growing slowly a year ago. This time last year, California gas prices were $3.12! And rents were barely moving. In many ways, as I’ve tried to argue, this inflation is a correction or recovery from previous (pandemic) conditions.
It was the same story back in May 2021, when we had our first major jump to 5.9% inflation: back in that report, transportation prices grew 22.8%, Housing 3.3%, Other goods and services 4.1%. These were the dominant categories then, and they are the dominant categories now.