As with yesterday’s producer price data, good luck to anyone trying to find significant tariff-led inflation in the U.S. economy in today’s consumer price numbers (for November), whether on the metals front or the China front. Because it’s still not showing up. There’s one clear exception (household laundry machines), which has been hit with its own product-specific levy since early February, but where doubts still persist about whether the resulting pricing power can stick. Some inflation is also apparent in motor vehicle parts.
Here’s the raw data, first for metals-using consumer goods where – bizarrely – powerful inflationary pressure are already being reported. For comparison’s sake, I’ve also included the statistics for overall “core” inflation (“core CPIU” in government lingo), which strips out volatile food, energy, and housing prices. And for fruits and vegetables, I’ve presented the numbers for these products in their canned and un-canned processed forms, to reveal whether the prices for the steel and aluminum cans in which the former come are driving price trends, or whether other factors have been more important.
Oct.-Nov. Since April y/y April y/y Nov
core CPIU 0.14 percent +0.77 percent +1.19 percent +1.51 percent
processed fruits -0.31 percent -1.30 percent -0.36 percent -0.22 percent
canned fruits -0.42 percent -0.48 percent -0.07 percent +0.69 percent
canned fruits -0.07 percent -0.05 percent -1.52 percent +0.67 percent
malt beverages +0.30 percent +1.78 percent +0.84 percent +1.61 percent
alcoholic +0.25 percent +1.38 percent +2.17 percent +2.60 percent
juices & non- 0.45 percent +1.64 percent -0.25 percent +1.73 percent
non-frozen, non- -0.27 percent +1.19 percent -0.53 percent +0.79 percent
non-alcoholic -0.02 percent +2.72 percent +0.03 percent +3.04 percent
new cars & trucks -0.01 percent +0.77 percent -1.62 percent -0.29 percent
motor vehicle +0.35 percent +1.15 percent -0.74 percent +2.13 percent
The main conclusions emerging from this first table? Between October and November, prices have been weaker than the overall core inflation rate for some products (canned fruits and vegetables, new motor vehicles, and three non-alcoholic drinks categories) and stronger in fewer products (beer and other malt drinks consumed at home, alcoholic beverages consumed in bars and restaurants, and motor vehicle parts). That development alone strongly indicates that metals prices are only one influence on the prices of metals-using products, and likely not the main influence.
Further evidence for the relatively low importance of metals prices, and therefore tariffs? Over the latest data month, prices for canned fruits and vegetables have fallen slightly faster than those for all processed fruits and vegetables, but prices for canned fruits have fallen more slowly. So it’s hard justify foisting lots of blame on the cans.
In addition, care is needed in interpreting all the drink statistics. In the first place, as noted in previous RealityChek posts on consumer prices, the beer and non-alcoholic drinks figures don’t distinguish between products sold in bottles from products sold in cans. And the alcoholic beverages numbers don’t even distinguish among beer, wine, and spirits, on top of combining canned products numbers with the results for products sold in bottles and other kinds of containers (although not much wine and spirits seems to come in cans).
A major spread also emerges from the numbers since April – the first full month when any metals tariffs had been imposed. The price increase for automotive parts is relatively strong, and the hikes for all drink categories are especially robust. These indicate that demand for drinks of all kinds has been up significantly during this period, but the data are complicated again by the failure to distinguish drinks sold in cans and in other packages. And most of these trends are clear and complications are clear from the two year-on-year statistics.
Less information about the impact of China tariffs can be gleaned from the new consumer price report, because the first of these levies was only imposed in early July, and most of these were slapped on producer, not consumer goods. But some of these products contain a great deal of producer goods like steel or electronic components, and the figures for two of them are presented below – including the latest monthly results, the price changes since July, and the July and latest year-on-year data. And tariff-led inflation of any kind…just isn’t.
Oct.-Nov Since July July y/y Nov y/y
core CPIU +0.14 percent +0.34 percent +1.48 percent +1.51 percent
tools, hardware -0.24 percent -0.31 percent -0.07 percent -0.12 percent
video/audio +0.14 percent +1.06 percent -0.79 percent -0.38 percent equipment
But there is one product for which tariff-induced price hikes are clear, and that’s those separately tariff-ed household laundry machines. Here are the data for October-November, since February (shortly after they began, and year-on-year for February and November.
Oct.-Nov. Since Feb Feb y/y Nov y/y
core CPIU +0.14 percent +0.74 percent +0.91 percent +1.51 percent
laundry equipment +2.97 percent +18.25 percent -7.61 percent +15.52 percent
Of course, the steel levies have no doubt contributed to the elevated prices, too. Even here, though, it’s interesting that despite a big October-November price jump, the year-on-year increase in November prices is somewhat lower than that for February. Also, even with the big new monthly surge, washing machine prices remain at four-and-a-half-year lows. In other words, as with steel and aluminum, these goods were flooding the U.S. market and sold at prices having little to do with any free market forces, much less free trade.