Tuesday, June 18, 2013

West regional CPI growth at 1.3 percent

The Bureau of Labor Statistics released this week the May CPI for US urban areas and regions. In the Mountain-Plains region, from May 2012 to May 2013, the CPI increased 1.3 percent, and was equal with April's year-over-year change of 1.3 percent.

In the first graph, we see that the year-over-year change in May for the Mountain-Plains CPI was down from May 2012's change of 2.0 percent, and was well down from 2008's pre-recession annual change of 3.7 percent.

Looking at each month for the past decade, we find that the year-over-year change in CPI is now at the lowest it's been since 2010.

This is a small increase for CPI, and the increase in the housing component of CPI, 2.6 percent, is still quite low compared to what we're seeing in a variety of other housing cost indicators. There is ample evidence that housing costs in both rental and owner-occupant properties are increasing at a rote in excess of 4 percent, year over year across the American west region. In Denver metro for example, the average rent is up about 4.4 percent, year over year, while the median home price is up about 10 percent. Year-over-year changes are even larger in many other markets of the West region including Phoenix, and many markets in California. The method of calculating CPI are complicated, but it is somewhat problematic when the official CPI establishes that housing prices are increasing at a rate far below what all other data indicates.