Interesting Data Point

Last week, the inflation numbers came out, and it was up slightly, which has led to much hand wringing, but it turns out that the only segment of the various price indices showing any meaningful inflation is housing, and this has been driven by landlords colluding on rents using RealPage software, and various hedge funds and private equity concerns pouring money into rental properties in selected markets in an attempt to derive a monopolistic advantage:

Once again producer prices confirmed that the only significant problem in inflation is shelter.

In December commodity prices declined -1.3%. For finished goods they declined -1.2%. Even producer prices for services were unchanged:

On a YoY basis, commodity prices are down -3.2%, finished goods prices down -0.2%, and producer prices for services up 1.8%:

So all the producer prices are significantly less than the 2% inflation rate that is the goal of the Federal Reserve. 

………

The only real inflationary issue in the US economy is shelter as measured by the CPI. Paradoxically, high interest rates, which depress homebuilding, do not help this issue at all.

What's that saying?

When all you have is a hammer, everything looks like a nail.

It appears that this is the Federal Reserve's approach to this issue.