A Word about the Odious Ridiculous Massive Adjustments to Health Insurance CPI, which Now Collapsed to Jan 2019 Levels

It turned Medical Services CPI negative, pushed down core services CPI, core CPI, and overall CPI. But it will swing the other way in October.

By Wolf Richter for WOLF STREET.

I’m going to post my analysis of the CPI data in a little while – I’m working on it. But I need to get this odious ridiculous massive adjustment to CPI health insurance, and the perverse effects it creates, off my chest first (update, here is my discussion of CPI).

The odious ridiculous health insurance mega-adjustments started last October, and I’ve been pointing it out every month in my CPI reports.

By July, it caused the health insurance CPI to collapse back to January 2019 level, and turned Medical Services CPI negative year-over-year, pushed down core services CPI, core CPI, and overall CPI. And it will continue to wreak havoc through September. You will see the details in my discussion of CPI, which I will post soon.

And then in October, it will flip the other way, and will push up all measures of CPI, but particularly core services CPI and core CPI. So there’s that to look forward to.

Every fall, the Bureau of Labor Statistics, which produces the CPI, undertakes annual adjustments in how it estimates the costs of health insurance. It then spreads those adjustments over the following 12 months. Last year, this adjustment cycle started in October, and it will go through September this year.

Inflation in health insurance is difficult to figure because numerous factors change, not just the premium but also co-pays, deductibles, out-of-pocket maximums, what is covered and what isn’t covered, drug formularies, etc., and there are all kinds of insurance plans out there, and they all differ locally and by state.

So the BLS uses a different method to estimate price changes of health insurance, the “retained earnings method,” which the BLS explains here. In the fall each year, it adjusts the index as more data become available. The entire index is an annual figure, divided into monthly increments, based on the annual “retained earnings” of insurance companies. So the month-to-month percent-changes of health insurance CPI are about the same every month for a 12-month period, and then it gets adjusted again, usually the other way.

Normally the annual adjustment isn’t such a huge deal, but this time, the adjustment was ridiculously gigantic, with totally perverse effects.

For the prior 12 months through September 2022, CPI overstated health insurance inflation by some amount. By September 2022, the health insurance CPI had risen by 28% year-over-year, which contributed to the big increase in CPI at the time.

Then in October 2022, the adjustment kicked in. Every month since then, the CPI for health insurance, thanks to this odious adjustment, plunged month-to-month by a ridiculous 4%, give or take. In July, it plunged by 4.1% from June.

This 4% month-to-month plunge, as opposed to a 2% month-to-month rise in the prior year, represents a month-to-month swing of 6 percentage points!

This chart shows the month-to-month percentage changes of the health insurance CPI, including the last 10 months after the odious ridiculous massive adjustments:

Year-over-year, the CPI for health insurance has now collapsed by 29.5%!

The plunge will continue in August and September, which will cause the health insurance CPI to collapse by around 38% year-over-year!

The price index itself (not percent change) in July collapsed to the price level of January 2019. Which is totally ridiculous as health insurance costs have risen substantially, not just this year, but in prior years, and the four-year cumulative increases have been big.

By September 2023, the index value will have collapsed to the level of early 2018!

Here is the health insurance CPI, as index value, not percent change:

But it’s going to swing the other way in October.

In October, there will be a new adjustment that will be applied to health insurance CPI for 12 months through September 2024. In the past, those adjustments tended to swing in the opposite direction, as you can see in the chart above.

The ridiculousness of this odious adjustment in this cycle, and the base effect that it creates going forward, could cause the health insurance CPI to swing wildly the other way starting in October 2023. This will push up core services CPI, core CPI, and overall CPI later this year and into next year.

The Fed’s favored inflation measure, the core PCE price index, collects health insurance inflation via a different method and doesn’t suffer these odious ridiculous adjustments.

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  133 comments for “A Word about the Odious Ridiculous Massive Adjustments to Health Insurance CPI, which Now Collapsed to Jan 2019 Levels

  1. squanky says:

    Lord, what a game.

    • Debt-Free-Bubba says:

      Howdy squanky, YEP, a game worth trillions especially if you control the Golden Goose…..

  2. grimp says:

    Jesus H.

  3. SoCalBeachDude says:

    How does this reconcile with the fact that all medical expense insurance premiums have soared upwards over the past 4 years – in most cases by very large amounts?

  4. rodolfo says:

    Not to worry it’s all just hedonic quality adjustment in reverse last October.

  5. djreef says:

    That’s gonna leave a mark.

  6. We’ll just eat more chicken.

    • Carlos says:

      And if that fails, we’ll have plenty of bugs to eat

      • Ed C says:

        Nah. Peanut butter and jelly before that.

        • NBay says:

          They are just little lobsters and crabs.
          Doesn’t anyone watch Spongebob……he could make great “tiny crab” patties.
          Healthier than mammal meat…which kills many early…..see CMAH gene knockout and get with it!

        • NBay says:

          Didn’t mean to leave out PB. It’s one of the ONLY 3 things I have been eating for over 5 years, HONEST!, except 4 times a year at sister’s, as she’s the family matriarch now.

          Experiment….biologist, ya know?
          And no Jam.

    • Nat says:

      Highly relevant, thanks to adjustments like these it means “proletariat stake” is coming to dinner tables near you: https://rall.com/comic/proletariat-steak

      The link means this probably won’t get posted, but it was to relevant not to try anyway. I feel like Wolf might be cynically amused by the prolitariot stake comic enough to potentially alow it.

    • Flea says:

      They Tyson just closed 4 chicken plants ,also china owns a large chunk of this company

  7. Dave W says:

    Would be useful to mention how much effect this has on CPI/core CPI/Core services/etc

    I remember you mentioned it in the past
    But would be useful to mention it each time it’s discussed
    Is this a 0.1% or 0.5% (for example) shift in the underlying index ?

  8. carlos leiro says:

    Hello, off topic
    It seems to me that Nuvei Corporation could be a new company that enters the listings of its Imploded Stocks. I am not an insider to say if so.
    On the other hand, I have been in the food sector for many years and I have known the IFF company since I started in this industry. IFF has an impressive history, a leader in flavors and fragrances and it seems to me that it is not going well, it is not just a company that came out of nowhere, it is recognized worldwide as a high-level company, in flavors and fragrances, with an enormous history , and it is in a market in which there are not many companies of this size and with a fairly secure market. I don’t know if IFF has entered other types of businesses that I don’t know about and it hasn’t done well there. I was surprised by this.

  9. Debt-Free-Bubba says:

    Howdy Folks and Mr Wolf. Makes me feel smarter and smarter….
    Thanks Mr Wolf for the education…..

  10. Nefff says:

    Any idea if/ how this could affect the yearly s.s. cola adjustment?

    • Wolf Richter says:

      Yes, it’ll push down the upcoming COLA adjustment. If it flips big for next year, that’ll help a year later.

      • Brant Lee says:

        Yes, so what will be the COLA adjustment for Social Security this year? In the neighborhood of 5%?

        • Arnold says:

          I bet 3%.

        • Petunia says:

          A ss expert on youtube, worked for ss over 30 years, says the expected increase in cola is ~3% and ~6% for medicare.

          Also please note that any medicare recipients who are waiting to “retire” later, say at 70, are subject to the hold harmless rule of ss which protects those that have retired from paying more for medicare than they receive in cola. Those not retired on medicare pay the whole increase.

          Example: If cola is 0% for a retired person and medicare goes up $10 a month. They are not charged the medicare increase because medicare increase cannot exceed nominal cola increase.
          If you are not retired on medicare, you pay the increase.

      • Nefff says:

        Thanks Wolf for confirming what Ive suspected ever since you started reporting on this. Its almost like they planned it that way.
        ain’t it funny how the mistake is always in one direction, the cynic in me is quite sure next years numbers will be fudged as well…

        • Wolf Richter says:

          It’s NOT always in one direction. Starting in October, it will be in the OTHER direction. That’s the point. It pushed UP the COLA for 2023, it pushes DOWN the COLA for 2024, it will push UP the COLA for 2025.

          Conspiracy theories about this are BS. The error goes in BOTH directions, and you should know this from reading the article.

  11. Carlos says:

    Wolf, what would be your estimate of the change in the MoM Core CPI figures if this Health Insurance CPI wasn’t being “adjusted” so much?

    Or perhaps what kind of increase we would expect to see in October?

    Would it be significant (ie. at least 0.1% increase in the MoM Core CPI)?

    • Wolf Richter says:

      Yes, if health insurance CPI swings from -4% month-to-month to +2% month-to-month, so a 6 percentage point swing, it would increase month-to-month core CPI by about 0.1 percentage points, for example from +0.3% to +0.4%. And it would do that every month for 12 month, adding the effect each month to the year-over-year core CPI.

  12. Paul says:

    This article made me curious about my own health insurance premium “Blue Cross/Blue Shield HSA” so I put the calculator to the numbers and lo my premium has risen by 40% in the past 12 months. No changes in my health or anything else, just increased premiums. This has nothing to do with the article except to note that our health insurance system is an absolute disaster and their seems to be no rhyme or reason to how the rates are calculated.

    • Arnold says:

      We have the best health system in the world.

      • William Leake says:

        We have the best health care system in the world as long as you don’t get sick.

      • Cas127 says:

        Anybody who has actually interacted with the US healthcare “system” knows that that old “best” chestnut is mostly political propaganda and has been for decades.

        And even if other nations’ systems are absolute crap, the US system has come to equal or surpass them in that wonderful regard.

        This is a nation with almost 4 million nurses (out of only about 150 million workers total – nurses are among the very most numerous, in occupational terms) and yet somehow ruthless medical inflation went on unimpeded for decades (very recently it may have levelled off).

        And, technology in essentially every other industry *lowers* costs…but not in medicine.

        Magically, the US “system” managed to repeal supply and demand…a large increase in health care personnel and treatments…did almost nothing to lower ruthless medical inflation.

        (Another old poison chestnut…everything is the insurers’ fault. Insurers might be villains as well…but they are responsible for a small *slice* of HC spending…the HC industrial-complex *built* this sinking boat).

        Ours is a system with incredibly perverse incentives and a wholly undeserved reputation for quality that has defeated reform for decades.

        Over 20% of GDP goes to “health care” in the US (1 out of every five dollars spent for *anything*) and our actual medical outcomes are markedly worse than a number of nations spending markedly less in GDP terms.

        If anything is *ever* going to get better, the delusional political myths of the past need to die.

        • NBay says:

          Like a young Amish girl at an Amish Cafe told me and two uncles, “I see you boys have been in the chestnuts”. (Tannic acid fingers.)

        • viscacha says:

          Clark Howard 8-11-23, minute 27. Listener took son to ER – hospital “accidentally” billed for Level 5 trauma instead of Level 1 visit. Unbelievable. What a mess. Profit driven system.

      • Fidra says:

        We don’t have a health-care system, we have a death-prevention system. There’s a big difference between being healthy and being not-dead.

        • Cas127 says:

          In too many instances, the health care industrial complex seems to actually function more as Death’s toll collector (witnesses at the wake) than actually effective interventional change agents.

          Anybody who has actually been inside an ICU (patient relatives) for any length of time would be pretty damn surprised at how ICUs actually operate (very few hospitalist physicians, specialists who skate through, machinery that commonly malfunctions, surgeons who make hair-trigger decisions on incomplete/erroneous info, etc).

      • Lucca says:

        Not true. Finland, France, Switzerland and a few other countries have better healthcare than the U.S. by far.

        • Hiroshi says:

          So does Japan, Australia, New Zealand, about 40 other countries in a recent study.

        • Desert Dweller says:

          I’ve read several reports indicating that US healthcare is dead last among the 32 developed nations.

      • Venkarel says:

        That depends how you rate it. People from all over the world come to the USA for very advanced specific care. If you have means we do have one of the best health care systems in the world. But since it is tied to employment (I am self-employed) I can’t say that ours is the best.

        • Lucca says:

          Switzerland, the Netherlands and Germany have better, more advanced healthcare than the U.S.
          I’m not saying the healthcare in the U.S. is not advanced, just that there are other countries that are even more advanced in their healthcare.

        • NBay says:

          Why then, did Jamie Dimon go to Europe after his throat cancer
          diagnosis and receive “treatment”? I’d say he has means to have the very best…….second, third, fourth, etc opinions, too……..

        • NBay says:

          I think Jamie is self-employed, too, but then I never even took bonehead Econ.

      • NBay says:

        Best “industry” to buy stock in (and almost everything related to it), is what Arnold really means….

        (I’m sure, because he is as sarcastic about our “system” as me…almost….barely) And no spec/spac stuff unless you understand the game, which means you better be IN it, creating it, patenting it, or have trusted contacts who are.

        Or to work in the management of almost ANY of it, and a few selected professions; Docs, Biochemists, equipment design, (or sales and supply of same), drug companies, drug sales, drug advertising, medical/bio-chem journalism…….to name just a few.

        • NBay says:

          OH…..And HOW could I EVER forget the whole huge “IN SILICO” industry?

          It’s approaching an art form……computer art….but still…….

          Or maybe it’s religious? After all, seeing what cannot be seen is kind of a supernatural endeavor, no?

          Molecule Prophets…….profits?

        • El Katz says:

          From firsthand experience, the U.S. health care (or as I prefer, “sick care”) system is dysfunctional. My wife has a weird disorder. We’ve been chasing it for nearly two years as I witness her physical deterioration on a daily basis. We are connected to a neurologist who is allegedly among the best in the area – knowledgeable, etc., but his staff sucks. We went to an appointment at another referral doctor (from his office). NONE of the required documents (tests, MRI’s, X-rays, etc.) were sent in advance, despite our repeated follow up with his office people who assured us that it would be handled and “to stop calling”.

          Another wasted month…. more wasted dollars… more waste – period. Not to mention the physical and emotional impact to my wife and our family.

          This isn’t exclusive to his practice. It’s endemic to the entire industry which has “grown” in staffing, but reduced in efficacy and efficiency. I wish I had my concierge doctor back because at least he knew me and could detect changes in my health by years of continued visits. This impersonal “assembly line” medicine has to be shot dead. How anyone can enter that profession and give the impression they hate sick people is beyond me.

          However, the bills do come like clockwork.

        • NBay says:

          They are ALL “weird disorders” when nobody knows how to define and then cure them, as they would have us believe,

          And BOTH aspects change constantly as we “make progress”.

          I will say imaging has gotten better, but only down to a “fat” mm or so.
          Helps with broken bones and trashed lower backs.

          And yeah, the bills go up as more “discoveries” (requiring experts in these new areas) are made.

          You have MUCH worse problems than people not forwarding “info” when you get sucked into that system.

      • Mark says:

        Cubans have the same life expectancy as the USA

        At a fraction of the cost. Statistics

    • Wolf Richter says:

      Just wondered, check your birthday… if you turned 50, 55, or 60 during the year, you got whacked by a higher age category.

      • Lucca says:

        This is true. Last year when I turned 55, my health insurance company (United Healthcare) sent me a letter saying they were increasing my rate because I had reached a “milestone” birthday.

        • Natron says:

          Turns out my health insurer (for my very basic insurance) offers a nearly 20% discount for paying a year in full ahead instead of monthly so if you can afford it, that’s money in the bank. Best “investment” rate I’ll probably make this year…

        • Lucca says:

          I don’t have that option. My health insurance is through my employer.

  13. dr Investor says:

    It is clear that the pandemic distortions threw a wrench in all historical models. Most of the results are garbage, including government ‘statistics’. Worse, even interpreting raw data in a historical context is extremely challenging. We are at an inflection point, when predictions are hardest. Tread carefully.

    • Lucca says:

      How could they censor someone?

      • Venkarel says:

        The way they have been doing it for the last six-seven years? I mean come on, go read Racket News (Taibbi’s site) or Shellenburg or Turley or Dershowitz or so many others. Not that I agree with the OP but it is easily possible.

      • Lucca says:

        Taibbi is a whackjob.
        If you believed Wolf was going to be censored for his site, you wouldn’t be even posting on here.

      • Rosarito Dave says:

        Luka, maybe one man’s whack job is another man’s award winning journalist?

      • Rosarito Dave says:

        I tried to post the awards he won, but it didn’t take, so I’ll try it this way..

        2008: National Magazine Award in “Columns & Commentary”

        2009: Sydney Award for his column “The Great American Bubble Machine”

        2020: Izzy Award honoring independent journalism outside of corp. control for articles on media biases in conservative and liberal news.

        Not quite a “whackjob”

      • Lucca says:

        Rosarito Dave,
        See what James Verini of Vanity Fair had to say about Taibbi.
        Taibbi is a whack job and a conspiracy theorist.

  14. MDM says:

    “So the BLS uses a different method to estimate price changes of health insurance…”

    A while back I went to the BLS website and looked at some of the documents on the methods they use. “Estimate” was appearing so frequently that I stopped reading and did a keyword search.

  15. Bs ini says:

    Thanks something never mentioned in any other financial news I read

    • NBay says:

      You think anyone would read it. Hell no. Most people just want to hear the government being damned for something simple to understand…..like using a government car to go shopping. Then the can talk about it.
      It’s why I like this site, my ONLY social media. The rest of the time I hunt for stuff on my own, don’t need “help” forming opinions, trying to develop my own in my waning years. What else am I going to do, go on stupid cruises?
      Yeah, thanks.

      • NBay says:

        Should say my only social media and ONLY dedicated financial media, unless you want to count an occasional look at Bloomberg while waiting for something else to start, and of course nightly SF news, and a look at all the Fox Murdoch gang’s best once in a while to see what they are pushing. No point in MSNBC/CNN as I generally agree with it….70-80%?
        BBC, NGK, and age German outfit once in a while.
        Everything just repeats on most all of them with different spins….news de jour.
        They just want to deliver max eyeballs for the advertising assholes.

  16. Slick Willy says:

    Ironically this morning is the FIRST time I have heard the bobble heads mention this on CNBC when discussing the CPI print.

    And in classic fashion, they used it as a way to suggest the Fed shouldn’t give as much credence to the upward moves in CPI after the fall because this adjustment and other base effects will be reversed… of course this was never mentioned as a drag over the last year.

    Heads I win, tails you lose.

  17. ru82 says:


    I think part of the reason they passed the Inflation reduction act was to reduce health care costs. I guess they nailed it from a government CPI data view

  18. Franz Beckenbauer says:

    You have to give Credit where Credit is due.

    The way Powell talks about These numbers with a grave voice and a serious face, then adjusting his glasses with this “this is really serious stuff we are discussing here”-look …

    This guy is good. In the Academy awards – no competition. Hands down winner. All categories.

    • NBay says:

      Knowing when and how to remove glasses is a CRITICAL skill for any media talking head.
      There is a theory that it adds to effect of the words spoken at the time because it’s what one does before punching your lights out, which , I suppose, does make things more serious, in a phony sort of way.
      Stagecraft 101, 2023, USA.
      I still like throwing shoes better,

      • NBay says:

        Sorry, that’s for remove only….not sure about adjusting for clarity. Then there is putting them in your mouth and…….never mind…I’m a weirdo.

        • 91B20 1stCav (AUS) says:

          Dammit, NBay! 😂 (…lemme take my glasses off, here…).

          may we all find a better day.

        • NBay says:

          You said you were too tall to re-up as a chopper pilot, and I’m not used to dealing with guys with more reach. So, put the glasses back on! Thanks.

          How about we just see who can be further out of the typical Boomer Box in these comments here (the culture they live(d) in, and pun intended), and still make sense? (and not piss Wolf off)
          Fair enough?

        • 91B20 1stCav (AUS) says:

          NBay – peace, brother! (given the steady sagacity of your observations, in this case made me spray me coffee over mouth, nose, specs and sundry…it’s all too true!).

          Fair ’nuff and best!

          may we all find a better day.

        • NBay says:

          Ever see Brad Lackey ride? I did at Sears Point and the height sure seemed to help him!

        • 91B20 1stCav (AUS) says:

          Saw Bad Brad race a few times, and met him once at the Lotus-Ducati (seriously, though ultimately un-serious, long story) dealership I worked at in Walnut Creek shopping for a used exotic after his retirement.

          Have always thought Motocross is one of the few motorsports where large physical size doesn’t instantly work against you and your machine as a competitor (cursed with the roadracing passion in my case, it still remains a passion…). Best.

          may we all find a better day.

      • Franz Beckenbauer says:

        I guess there is also that “Here’s looking at you, Kid” factor.

        Stagecraft 101, 1942, Casablanca.

        • 91B20 1stCav (AUS) says:

          Franz – ah, the value of stagecraft. When was it that some bright spark truly recognized the ‘Murican zeitgeist and realized running celebrity for office (starting with George Murphy) might be a masterful shortcut to political power??? (…and, given recent history, Welles’ C.F. Kane would now cruise to gubernatorial victory and farther…).

          may we all find a better day.

  19. Ltlftc says:

    Bullwhip incoming.

    Though with health insurance taking up less than 1% of total, total wouldn’t change more than a tenth or a couple hundredths.

    Still wild.

    • Wolf Richter says:

      It would change core CPI for example from 0.3% month-to-month to 0.4%. Annualized from 3.66% to 4.91%.

      Every month, for 12 months.

      • Ltlftc says:

        Looking at it annualized, that really is wild.

        People depending on Cola or iBonds getting taken until 2024 then.

  20. ru82 says:

    Local universities said they will raise tuition cost for 2023-2024 calendar year by 5%.

    I am guessing the professors want their raises?

    • Herpderp says:

      College tuition inflation averaged 4.63% annually from 2010 to 2020. Absolutely nothing new there.

    • Arnold says:

      Football coaches are always the highest paid employees at universities.

      • Flashman says:

        With the changes to college football conferences, paying the players, all the television money, etc., coaching staffs should be contract workers of some type and not public employees. University Presidents should be contract employees also.

        • NBay says:

          Almost every worker in the USA is rapidly becoming a contract worker.
          Sort of like a corporation, but with total liability for ALL the results of their actions and their physical needs.
          It’s the best kind of slave there is, you don’t even have to feed or house them….

          …a true commodity, the “human resource”……you pay for “it” or not, whatever works best for Top Management and stockholders profits.
          Uncle Milty’s way…..and Ronnie’s handlers.

        • 91B20 1stCav (AUS) says:

          NBay – socialize all risk, privatize all profit, and squander all our spacecraft’s resources in that service (though eventually, usually later, and will be termed ‘bad luck’ by our ‘shepherds’, the snake starts consuming its tail…).

          may we all find a better day .

        • NBay says:

          Yeah. With everything that’s going on recently, maybe someone should take a CLOSER look at the life support modules, ya think?

          Might have to whip up a BIG work around and REAL FAST like they did with the Apollo 13 CO2 scrubber, regardless of what has to be torn apart…..even the Mission Plan Book.

    • NoBadCake says:

      WSJ today, top center:
      Colleges Spend Like There’s No Tomorrow. ‘These Places Are Just Devouring Money.’

      • Mr. House says:

        No bailouts for schools, which is really what student loan forgiveness is all about.

        • Venkarel says:

          That and to secure the vote of the next generation of “elites” because that is whom it helps, especially the payment limits being adjusted down to 5% of income.

    • Blame it on the Fed says:

      Professors get the same measly raises as everyone else, with an extra helping of deferred promotions from illegal no-poaching agreements. Many more instructors end up never getting hired and live in indentured servitude, teaching a couple of courses for a few thousand dollars per semester as adjuncts while needed gig work to pay the bills. The money is going to college managers with CEO compensation plans and their bloated administrative team sizes to make themselves feel important.

  21. Jackson Y says:

    How did Energy CPI rise only 0.1% when WTI crude rose from $68 to $82/barrel in July?

    • Kevin says:

      Some experts were saying that the increase in oil price will be reflected in August’s CPI report. Expect next month’s headline CPI to show the effect.

    • The Real Tony says:

      It must be some sort of voodoo accounting.

      • El Katz says:

        They use lottery balls and a roller basket to make up the numbers.

        These people have squandered whatever microscopic particle of credibility they had. I believe nothing they say. Even the 4 Pinocchio guy got 4 Pinocchio’s!

        • 91B20 1stCav (AUS) says:

          Mr. H – perhaps they worry about too-many eyeing the chairs in advance of this musical-round’s cessation…(…or, they’re simply the financial sector’s version of ‘Baghdad Bob’…).

          may we all find a better day.

        • El Katz says:

          Mr. H: It’s all about the “narrative”, not the truth. Some of these a$$hats think that all of the “great unwashed” aka “deplorables” are just a bunch of rubes that can be easily distracted by a monkey, an organ grinder, with a few shiny objects tossed in the air for additional distraction.

          Critical thinking, for the most part, is dead. Logic? Fuggedaboutit. Connecting dots? What dots? Have an opposing viewpoint? You’re cancelled… or screamed down (which is what replaced intelligent discourse which is the basis of learning). We’ve shed a lot of friends and family as a result.

          There used to be a press with real investigative reporters whose goal it was to keep the more blatant liars at bay. No longer. Now we have “news presenters” who parrot whatever bullshit is fed to them and we’re supposed to gulp it down like so much pablum. I shut down entirely when watching the identical message of “we’re all in this together – stop the spread” on multiple channels on the teevee. The words were identical. No one does that…. ever… if they’re for real. It was a script delivered by robots…. with the creepy graphic that looked like a mine. It wasn’t the message that initially troubled me… it was the creepy presentation that stopped me in my tracks. It was like watching the movie “1984”. Haven’t watched local or national news since. Even the “gray lady” has succumbed to the “narrative”. This is what happens when news sources are consolidated under singular ownership who shut down independent thinking (or get fired) and why many of us seek alternative analysis, such as Wolf Street, for information.

          The only challenge is trying to separate the barley from the BS.

        • NBay says:

          Someday I hope to learn what “critical” thinking is and maybe even try it out.
          For now, “thinking” will have to do, even though to be honest I couldn’t define it either.

          DeCartes says it’s what makes me an “am”, but that isn’t much help either.

          Oh well. I AM one of the great unwashed, haven’t taken a shower or used soap (or anything but baking soda on my teeth and a wet towel here and there from time to time) for 5 years……another experiment. Read up on Acid Mantle, I’m not just doing money saving experiments with this and my one meal a day diet.
          Also get it straight there a far more bacteria cells on and inside you than your own…..I’ve heard 10x or higher, they don’t know. But then they are maybe ten or much more times smaller.

    • RickV says:

      I looked at the detail categories in the CPI report. Under Energy, gasoline was up .2% and fuel oil was up 3.0%. Offsetting this was Electricity down .7% netting to the .1% increase. Now, for the hottest July on record with air conditioners blasting throughout the US, I’d be happy if someone could tell me why electricity went down .7%?

      • Wolf Richter says:

        “I’d be happy if someone could tell me why electricity went down .7%?”

        It’s the change in the cost per unit (kwh), not the overall amount you consume in one month. Like gasoline… it’s the cost per gallon, not the total amount you spend on gasoline that month.

        For power generators what matters is their cost of fuel, and the price of coal and natural gas plunged over the past 12 months. And that is feeding into the prices of electricity.

        • RickV says:

          Wolf, thanks for your response and good work. The .7 percent decrease in July electricity is a little more nuanced. For example, in June the monthly price of electricity in the CPI rose .9 percent. Per the BLS notes in the July CPI report: “The gasoline index decreased 19.9 percent over the last 12 months …. In contrast, the index for electricity rose 3.0 percent over the past year.” Maybe the price of natural gas plunged over the past 12 months, but per the BLS the Utility (piped) gas service increased 2.0 percent in July. So is this a monthly number or an average of twelve months, and, if so, how could monthly electricity CPI go from +.9 to -.7? Awfully confusing.

  22. fred flintstone says:

    In Indian country……there is an old wisdom…….you can easily tell when white government administrator lies……..his lips are moving.
    Unfortunately, in regards to my government, I’m feeling more and more like an Indian.

    • LifeSupportSystem4aVote says:

      @fred flintstone

      Agreed. What is even more bothersome to me is how many Americans believe the bullsh!t they (govt) spread. They’re too busy watching their ‘smartphone’, lustily participating in the blue vs red screechfest or some other meaningless exercise rather than employ even a modicum of critical thought.

  23. monkee says:

    I’ve noticed that financial media loves to pick and choose whichever fits their narrative. Thanks to that healthcare adjustment, CPI has been indicating that inflation is solved, profits are saved! But once it swings the other way, they’ll go to using Core PCE because the swing won’t be so drastic.

  24. Gabby Cat says:

    From inside the healthcare industry, many insurances are dealing with cataclysmic events that took place over the last three years. A good portion of young healthy people are no longer participating in health care insurance. The pool is now spread out over a larger sickly population. No true data explains why at this time. Also, the cost of shipping from everything made overseas, has increased costs greatly in Med and Pharma. Very little is made locally. Those 2K shipping containers that went to 22K overnight caused all products increase between 40-60%. Someone has to pay for it!

    • El Katz says:

      So riddle me this, Batman…. how can a certain online drug company sell their drugs for 1/3 to 1/2 of what the pharmacies charge? Same made in India stuff… same bottles and manufacturer in some cases….. with the prescription filled and shipped to your door?

      The answer is simple. It’s a rip off. One item my wife needs is $65 at CVS plus tax. Bought it from online purveyor (shipped from Hayward, CA – so U.S. based pharmacy and pharmacists) for $20 including tax and shipping. Another one was $60 for 30 pills. Got 90 for $90. One of the items isn’t even in the formulary for the $90 a month Part D coverage she has.

      It’s become a blood sport in our house to deprive these ripoff artists of profit. The only thing I buy at CVS is beer as it’s a loss leader and they’re usually $2-4 less per 12 pack than anyone.

      • Arnold says:

        Are you talking about Mark Cuban’s new company?

      • Anthony A. says:

        A lot of us folks on Medicare (Part D) are using GoodRX and Single Care to buy prescriptions when Part D drug plans providers are overly expensive. I just bought a steroid cream for $14.00 for a skin condition I have that my Part D provider was charging $81.00 for. Screw them!

        Another older friend has been prescribed a drug for his Type II diabetes that his Part D plan provider wants $392.00 for 90 pills. For $60+, he gets the script of 90 pills from a supplier in India. It takes a couple of weeks to get the pills from India, but it saves a bunch.

        Let me tell you, there is a lot of this stuff going on these days if you are on medicare Part D.

        The interesting thing is that if you are a Medicaid recipient, a lot of these drugs are free to you! Gotta love this stuff.

        • Venkarel says:

          Don’t forget costplusdrugs.com Cubans discount site worth a check as well.

        • 91B20 1stCav (AUS) says:

          El K – guessing you’re onboard with Elon’s hoped-for-and preferred model of direct-to-consumer auto sales and disposing of dealerships?

          Brick ‘n mortar plant/stocking/staffing/sales tax collection costs vs. online put them into an unwinnable knife-at-a gunfight scenario from the jump (‘Muricans have never truly embraced that good customer service COSTS, making it difficult to find, price being everything), made worse the by high corporate-management overheads of dinosaur big chains, (with the same opinion of customer service as the public) inevitably, and unsurprisingly, sacrificing any outdated ideas of customer service/loyalty investment in favor of a hoped-for next-quarter’s share price (and/or merger).

          The meltdown continues, in any event…

          may we all find a better day.

        • El Katz says:

          No, I am not a proponent of getting rid of the independent dealer. I am in favor of limiting the influence of the likes of Autonation, Lithia, Penske, etc.. The old model worked better as the leverage of the smaller operations didn’t allow for monopolistic behavior that these behemoths attempt to exert as the manufacturer could beat the smalls back down into their hole when they got too big for their britches.

          At the dawn of the public company craze, there were some guardrails as to how many franchises one public could have in any one market. Even back in the 90’s, some of us were smart enough to know that limiting competition was good for no one – customer or manufacturer alike. And when one public goes down (bk’s), it can severely damage representation in that market and the customer is the one who pays – and they blame the marque because few truly understand the dealer/manufacturer relationship – whether the dealer is public or privately held.

          If you have 10 independent Technomobile dealers in a metro market, and one goes rogue with the ADM stickers and abusive practices, the customer can vote with his wallet and go to a different operator. If they’re all owned by a single operator (or dominated by one), not so much. The customer gets screwed and blames the manufacturer.

          Tesla is a prime example of why you don’t allow monopolistic behavior. Their service centers are few and far between. Sure, the car may be capable of traveling 450 miles (or whatever) on a charge. But if it busts something…? Where’s the nearest service center if you’re in Bumf*ck, TX 350 miles from Dallas or Austin? How about in Grapevine, CA? However, with a Chevy, some podunk town has a dealer… maybe a multiple line GM store that has interchangeable parts from their GMC franchise that fit your Chevy. They can even chase their wholesale parts guy to run 50 miles to get that obscure kafrotznitz that broke…. as they have relationships with other operators – most of which operate differently when it comes to parts inventories and capital exposure. The corporate stores (publics) often manage inventories to the bone…. the other guys have been in business for decades and may even have a cornering light for your 1972 Eldorado convertible.

          Since Tesla service centers are manufacturer owned, the repair parts are prioritized to the assembly line rather than the customer who just busted a control arm on a pothole in Bumf*ck, OK. That control arm represents one less car that Tesla can build…. and determining where the maximum profit is for that component ain’t rocket science. I can tell you where exactly where that part goes. In Tesla’s system, it’s on intergallactic backorder and goes to the assembly line. The company I worked for would regularly remove parts from the assembly line to support customer satisfaction. I had to pull that string for my own car a little over a year ago to get a wiring harness that was made in Ukraine… and there was none available, even in the spare parts division’s critical parts order category. Unobtanium… but I “knew a guy”…..

          People forget who the businessperson is who buys the uniforms for the local little league team… or new helmets for the football team… or pays to maintain the soccer field (of course, it has his name on it)… provides the convertible for the homecoming queen…. has weekend BBQ’s and car shows to keep the local kids out of mischief. He/she hires local kids to be lot jockeys and parts runners. They support local community colleges auto shop courses to, not unselfishly, provide a stream of qualified technicians that can make some middle class bucks vs. flipping burgers at Dairy Queen. They’re invested in the community and seen in the local restaurants and businesses exchanging pleasantries with their clientele. Odds are Elon doesn’t know where Sandwich, IL is. Nor care. But Joe Blow who owns Joe Blow Motors in Sandwich does.

          The online buying charade is just as rife with risk as any other purchase. The company I worked for identified online buying as a “thing” in the early early 2000’s. However, it was expensive to develop, the technology was changing at blistering speeds, and dealer adoption was dismal because they saw it as a “big brother” move.

          A lot of the transaction can be put online. Credit apps, doc signing…. In our case, the stated goal was a one hour purchase…. but it blew up because of the wild card of a trade. Everyone thinks their car is in “clean” or “excellent” condition – even if it’s missing a left front fender, the windshield cracked, the tires bald, and their cat destroyed the interior when they left it in the vehicle alone. Buying a car outright (no trade) is easy peasy online. Once it gets muddled up with a trade, fuggedaboutit. Payoffs can be a mess. Misrepresented titles (some non-franchised luxury auto dealer here in Snottsdale got stiffed for $600K on some stolen Ford pickups that had clean titles and AZ DMV missed it because Ford never reported them stolen). Customers can be just as sleazy as a dealer.

          I no longer do any online transactions that I can’t afford to walk away from. Too many thieves and shills. That’s why I haven’t used Fleabay or PooPal in nearly a decade. I’d rather donate stuff to charity than deal with thieves in an attempt to pick up a few shekels.

        • 91B20 1stCav (AUS) says:

          El K – edifying response. Would you consider CVS or Rite aid similar to AN, Lithia, etc. when it comes drugs vs. the brick ‘n mortar neighborhood pharmacy (where they still exist). Retail pricing problems of scale or nature of the product?

          may we all find a better day.

    • Sams says:

      Well, in Europe some medication is one tenth the cost of what it is in the USA. I guess national health care bodies negotiating the price of a drug for one country make a difference.

      • El Katz says:

        No. That’s not entirely correct. In the U.S. there’s multiple companies that touch the drugs. Each extracts their costs plus a profit. The cost of the drug itself is still inexpensive… it’s each party extracting their vig that raises the price multiple times and exponentially. The online service I use has transparent pricing. X for the drug (usually pennies), plus X for dispensing the drug, plus X for shipping. Try and get that from CVS.

        I use costplusdrugs online. While I have drug insurance, I find it more expensive on most items and I no longer even bother to use it. One prescription I have is over $90 per month if I were to use my *insurance*. I pay $90 and change for a 90 day’s supply or 1/3 the cost by merely using the costplus website. The shipping cost ($5) to my door is less than the wear and tear on my car to go pick it up – plus you can combine prescriptions in the same mailing and still only pay the $5.

        We used GoodRX for awhile (before the launch of costplusdrugs). It’s rarely a bargain anymore. Yeah, you can beat retail but it’s hard to beat cpd… that is unless cpd doesn’t carry it (they seem to only have generics – not name brand on patent).

        The other difference between Europe and the U.S. is that a pharmacist in some European countries can prescribe a drug where in the U.S. you have to have a physician prescribe it – which adds cost, time, and complexity to the process. I still recall walking into a pharmacy in Italy because I had something going on with my eye and the pharmacist gave me what would be a prescription drug in the U.S., on the spot, without any M.D. involved. I think it took 5 minutes and I was out the door.

        • NBay says:

          So, I was at the DZ in Sheridan, OR, we had all just partied pretty hard the night before, I got up real early to pee and there was this Army NCO who had been jumping (and partying) there a while just coming back from a run, all sweaty, and started doing push-ups, etc. I walked over and said (with all our hangovers and all), “Are you nuts?”

          Without even looking at me he just said, “One way or the other you pay”.

  25. The Real Tony says:

    It seems the rule of thumb is they always understate the inflation rate when the 30 year mortgage rates move above 7 percent.

  26. Emil says:

    Ok, if we take out this insurance from CPI, does the inflation still increasing or decreasing?

  27. Declan says:

    When you say it will flip the other way in October, does this mean the flip will first be reflected in the October inflation figures published in early November, or the September figures published in early October?

    Asking for a friend who might want to gamble a couple hundred bucks on puts before the CPI print in either November or October.

    • Wolf Richter says:

      1. It should be reflected in the CPI for October, which is released in November. There have been years when the switch took place a month earlier. So maybe this isn’t set in stone.

      2. The people who have to pay attention to this stuff know this. So it won’t be surprise to them. It will be built into the “expectations.”

  28. Beg4mercy says:

    Danielle DiMartino Booth, recently speaks about all the downward revision magic going on with government reporting. She thinks NBER is slow to adjust its data…

    Several analysts still suspect these delayed revisions will eventually surface and be far more serious, because they are being suppressed.

    It’s possible that’s ridiculous, but believing a massively monster bull market is unfolding, is much more ridiculous and unfounded.

    • LifeSupportSystem4aVote says:

      I disagree with Danielle. I fully expect govt reporting, emboldened by the lack of push back against their garbage stats, to even more aggressively amplify the revision magic to the insanity side.

    • NBay says:

      Sure are a lot of “Magic Bullet” fans here. Other than my two Tramadols a day for my totally trashed back, I’ll pas on all of them and go with diet and what exercise (mostly isometric) I can do.
      And I really tried, and appreciate it, but all I could get was the general idea from the article, which is more than enough considering my situation. I know what I pay for part B and my supplement.

      • El Katz says:

        NBay: While I do shower daily, I don’t take a bunch of drugs either. I take one to keep me from ripping people’s faces off and one other that I could likely do without. Most of the voodoo stuff that doctors love to prescribe, I refuse to take and have not suffered as a result. The people I personally know that are the most sickly are those that eat pills by the handful. My wife trusted doctors and took all kinds of crap, against my advice. She’s paying for it in spades as most of her ailments are the result of drugs she took on “doctor’s advice” that were “safe and effective”, one of which destroyed her digestive tract which then lead to all kinds of inflammation issues… which then lead to triggering things that attack other functioning parts of your body that are likely incurable/irreversible. I guess the term “medical practice” isn’t a euphemism.

        I am not one that believes in silver bullets and I avoid doctors’ offices like the plague. They’re full of sick people and I don’t want what they’ve got. Thus far, it’s been a successful strategy for me.

        Exercise can be had by doing things and diet is easy to deal with… only eat when you’re hungry (not when it’s “dinner time”) and follow your cravings. Your body talks to you if you listen.

        • NBay says:

          Sorry about your wife. I watched the same thing happen to my mom.
          I dropped out of Pharmacy school for a reason, and it cost me a fiance I really loved…..5′ 10 1/2″ ex-model natural blonde, smart as hell.

  29. Bug says:

    Inflation is man made and intentional to keep us poor, nobody says that!

    • El Katz says:

      Inflation is the result of normal human behavior. Most people are followers. That’s why social media “influencers” make a fortune play acting, hawking *stuff*, and their audiences are called “followers”. The sheep don’t even recognize they’re being played. Wearing a certain pair of shoes doesn’t make you a basketball great. It just means you have no respect for money and someone willingly relieved you of it.

  30. Mr. House says:

    Are you associated with the WEF WOLF?


    Explains your penchant for censorship………..

    • Wolf Richter says:

      Bullshit, you moron. The WEF violated my copyright by publishing one of my articles in 2017, that they had gotten from Business Insider (which had my permission to republish, but I retained my copyright). I asked the WEF to take it down due to copyright violation, and they just ignored it.

      Look at the thing you linked. That’s the kind of braindead crap that you post that causes me to “censor” your comments.

      Here is my original article that they stole:

      A gazillion websites have stolen my articles over the years in violation of my copyright, and they called me “contributor” or “associate” or whatever, and I should sue them all, but if they’re not in the US, I can’t sue them, and even if they are, and even if I can find an entity that can be sued, it’s not worth it.


    • NBay says:

      Yeah, Wolf spends $120K plus 5 times that for appropriate housing and dining, to go to Davos every year and…uh……”associate”….

      This is a bigger Media Empire than anyone thinks……

  31. longstreet says:


    Other than this medical insurance metric…
    what other elements of the CPI stick out as completely outdated or inaccurate?
    Homeowner survey?

    In other words , how would you change the CPI? (Maybe for another thread)

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