9 ms·

U.S. Consumer Prices Rose Strongly Again in May

100 points by mariojv 5y ago

splatcollision 5y ago
From what baseline? The pandemic dip? Or pre-pandemic levels? Here's some actual journalism: https://jabberwocking.com/the-price-of-bacon-is-up-8-1/ https://jabberwocking.com/the-price-of-bacon-is-up-8-1/
- prepend 5y ago
  This is the CPI, it’s measured the same way it always is. There’s value in watching it, not sensationalizing it. The 12 month rolling chart straight from BLS [0] I think provides more info. And if you want more trends than just prices against the previous year, you can look at the absolute chart for some of the items they track [1]. Check out how bananas and electricity haven’t changed in 20 years, woot! [0] https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri... [1] https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri...
  - splatcollision 5y ago
    Yep remember who owns the WSJ and what their agenda is. Replace WSJ with any news outlet!
  - yrro 5y ago
    [1] should be https://www.bls.gov/charts/consumer-price-index/consumer-price-index-average-price-data.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri... I think
    - prepend 5y ago
      Yes, thank you. That’s the right link!
  - sagarm 5y ago
    The price of gasoline is incredibly volatile. It regularly hits 50% y/y change!
- doitLP 5y ago
  Thank you. Excellent little piece and yet another lesson in how bad even “gold-standard” news outlets are. It’s actually dangerous to report like this because major decisions are made off headlines like that every day.
lumost 5y ago
China has grown successfully with inflation ranging from 5-15% over the last 3 decades. If inflation maintained a persistent 5%+ clip over the next 10 years how would that effect VC funding and startup formation?
- bko 5y ago
  No it hasn't. https://www.macrotrends.net/countries/CHN/china/inflation-rate-cpi https://www.macrotrends.net/countries/CHN/china/inflation-ra... Year Inflation Rate (%) Annual Change 2019 2.90% 0.82% 2018 2.07% 0.48% 2017 1.59% -0.41% 2016 2.00% 0.56% 2015 1.44% -0.48% 2014 1.92% -0.70% 2013 2.62% 0.00% 2012 2.62% -2.93% 2011 5.55% 2.38% 2010 3.18% 3.90% 2009 -0.73% -6.65% 2008 5.93% 1.11% 2007 4.82% 3.17% 2006 1.65% -0.13% 2005 1.78% -2.05% 2004 3.82% 2.70% 2003 1.13% 1.86% 2002 -0.73% -1.45% 2001 0.72% 0.37% 2000 0.35% 1.75% 1999 -1.40% -0.63% 1998 -0.77% -3.56% 1997 2.79% -5.53% 1996 8.31% -8.48% 1995 16.79% -7.47% 1994 24.26% 9.65% 1993 14.61% 8.26% 1992 6.35% 2.80% 1991 3.56% 0.50% 1990 3.05% -15.19% 1989 18.25% -0.57% 1988 18.81% 11.58% 1987 7.23% 11.58%
tryptophan 5y ago
Oh no! The experts told me that the record April inflation was a one time thing. The dollar index also shows that the dollar is down ~10% in value since 2018-2020. Which is concerning, because the USA is the strongest economy so you would expect people to flee to the dollar in times of crisis, pushing up its value.
- flunhat 5y ago
  We're in a crisis?
  - nO0b 5y ago
    Nah, what could go wrong? https://www.tradingview.com/symbols/FRED-M1/ https://www.tradingview.com/symbols/FRED-M1/
    - gen3 5y ago
      The M1 is visually deceptive because how it was calculated changed, leading to the spike. The M2 provides a better overview: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
      - symlinkk 5y ago
        Is that supposed to make me feel better? It looks like 10 years of dollars were printed in the last year?
deleted 5y ago
[deleted]
bko 5y ago
It's important to remember that inflation hurts the poor most. The wealthy will have their money in assets that may benefit from inflation (stock market up 30+% since pre-covid seem a little odd to anyone else?). The poor spend a larger percentage of their income on consumer goods that will most likely be affected. Inflation is a nefarious way to finance spending without hidden consequences and distortions.
- creddit 5y ago
  Depends on how much debt the poor have.
  - bko 5y ago
    I don't see your point. I guess you assume inflation will also translate the higher wages so that people would be able to pay off their debt? Inflation will lead to higher rates so you won't be able to refinance or get a cheap mortgage. This will drive home prices down which may or may not offset the increase in interest expense. Here's credit card debt based on income. I'm guessing most of this debt is a kind of rolling balance for regular expenses. I doubt wages would be able to keep up w/ consumer prices. I don't think people think inflation will somehow get them out of their debt if they're using it for every day purchases that have now become more expensive $290,000 and more – $12,600 $152,000 to $290,999 – $9,780 $95,00 to $151,999 – $6,990 $59,000 to $94,999 – $4,910 $35,000 to $58,999 – $4,650 Less than $34,999 – $3,830 https://www.debt.org/faqs/americans-in-debt/demographics/ https://www.debt.org/faqs/americans-in-debt/demographics/
    - bidirectional 5y ago
      Inflation erodes the value of debt.
    - syops 5y ago
      Inflation makes existing debt easier to pay off. It doesn’t make acquiring new debt easier.
    - 5y ago
gruez 5y ago
It's worth noting that it's 5% annualized, ie. if inflation kept growing at the same rate for a year, it would be 5%. Prices didn't actually rise 5% in one month. edit: it isn't annualized, but rather YOY edit2: annualized == YOY, so either statement is correct
- sp332 5y ago
  Thank you, that was my first question from reading the headline.
- frob 5y ago
  I'm not even sure it's that. The stated metric is how much prices have risen since May 2020. So it is the year-over-year change, but the baseline is a very weird covid-May.
  - lumost 5y ago
    A common statement on short-term inflation is that most suppliers have roughly year long contracts which lock in prices. There have been large liquidity injections since April of 2020, it's possible that we're looking at a very weird covid April/May + inflation.
  - seanmcdirmid 5y ago
    I didn’t notice pricing being especially weak last year beyond gas in May 2020, quite the opposite actually, at least in my area.
    - thehappypm 5y ago
      Did you do a lot less shopping in May 2020 than normal? Less shoppers risking it at Best Buy might have led to lower prices, but selection bias means a lot of us good citizens who stayed inside didn't see it.
      - seanmcdirmid 5y ago
        Not really. But then again, we mostly shop for food, which is where I noticed most of the price increases. I would say our grocery bill is now around 30% higher than it was pre-pandemic.
ReptileMan 5y ago
Where I live food and basics have jumped from 20 to 50 percent in the last few months. The measures just needed one year to go trough the chain.
- airhead969 5y ago
  Meat prices temporarily increased sharply, but will likely subside over time with increased supplies.
MrPowers 5y ago
The Consumer Price Index (CPI) is a measure of inflation and you should be aware of the adjustments it makes to accurately interpret the measure. It uses "owner equivalent rent" instead of housing prices and makes substitutions for example. Rob Arnott poked fun at the index a few years ago when they substituted chicken for beef. It's incredible to reflect on how different the macro landscape is now compared to the last time inflation was this high. In 1984, inflation was 4%, the long bond yield was 14%, and the cyclically adjusted priced to earning ratio was 10. Now, the long bond yield is 2.3% and the CAPE is 37.4. Real long bond yields (nominal yield minus inflation) have gone from 10% in 1984 to -2.7% now. The yield on Treasury Inflation Protected Securities is negative, see the government website: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
- mrcode007 5y ago
  FOMC doesn’t look at CPI. They use CPE: https://www.bea.gov/data/personal-consumption-expenditures-price-index https://www.bea.gov/data/personal-consumption-expenditures-p...
axaxs 5y ago
I feel like all these numbers are bogus. Housing? Seeing as it's nearly half of people's spending, I feel it should be weighted appropriately. And if so, real prices would be closer to 20% inflated in most markets YOY.
- spaetzleesser 5y ago
  Add education and health care to this and you get some pretty serious numbers.
- staticman2 5y ago
  Half of people certainly are not buying houses in any year.
  - woodruffw 5y ago
    "Half of peoples' spending" presumably means "roughly half of individual post-tax income goes into housing costs," not "roughly half of individuals buy a new home each year." I don't know whether that number is true or not, but it doesn't seem implausible given mortgages and rent.
  - archon 5y ago
    At least half of people are involved in the housing market, not just immediate buyers. Because you’d better believe if residential property prices skyrocket, so will rental rates.
    - staticman2 5y ago
      My point is when you own a house your expenses don't skyrocket because your neighbor sold a house for a 30% higher price this year than your other neighbor last year. Houses may or may not be half of people's spending like the poster above claimed, but homeowners generally do not see prices inflate when a small portion of their neighbors buy or sell homes. So whether or not housing is 50 percent of people's expenses that doesn't mean 50 percent of expenses have been subject to inflation.
nimbius 5y ago
the reason wallstreet is poshing this as positive news is because investors react positively to the idea of pandemic recovery. most commenters have already proven this false. even if the 5% were true, it doesnt erase the billions in back-rent debt most americans are saddled with due to the eviction moratoriums. recovery IMO is still 2-5 years out. The reason you should be seriously concerned about this inflation is because the fed never backed off quantitative easing from 2008, and in doing so has created a corporate credit bubble. To combat inflation in 2021, all they can do is hand-wave and insist this is "transient" inflation. nudging interest rates would cause a corporate debt crash. https://en.wikipedia.org/wiki/Corporate_debt_bubble https://en.wikipedia.org/wiki/Corporate_debt_bubble
- TechBro8615 5y ago
  > doesnt erase the billions in back-rent debt most americans are saddled with due to the eviction moratoriums “Most” Americans? Surely it’s not even close to 50%. Source?
  - adventured 5y ago
    The parent is sensationalizing, to put it mildly, when they say "most." The figure is closer to 3%-5% of US households that are severely upside down on rent payments. The total sum estimates range widely from around $10 billion to $50 billion. Nobody seems to have a great handle on the figure, landlords don't report this information cleanly to a single source such that we can put it all together easily. You'll see Bloomberg, Reuters, housing organizations, et al. reporting (speculating) in that $10b to $50b range across the past 6-8 months of time (they largely forward speculate based on when the financial hammer has been expected to fall, or begin falling). There are around 123 million households in the US. 3% of that figure is 3.7 million households. That's $9,459 per household in that group in back rent if the sum is $35 billion. That's in the right universe in terms of making sense.
aazaa 5y ago
Two words: base effects. Year-over-year comparisons reflect the abysmal economic conditions during the pandemic. It's like comparing your current net income to one year ago but one year ago you were unemployed and paying off student loans while today you have a job at Google. The comparisons to watch are month-over-month (MoM). The BLS reports MoM CPI increased 0.6%, after a 0.8% MoM increase in April: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm So the rate of CPI change is negative MoM. From the same page, BLS reports CPI less food and energy fell MoM from 0.9% in April to 0.7% in May. The real headline here should be that inflation is slowing on a MoM basis. It's that rate of change of inflation that matters. If it remains negative (disinflation), then price increases will continue to subside. But if CPI growth remains negative for long enough, it can translate into deflation. That's not an outcome being discussed widely now, and for that reason (among others) it should be considered seriously. Policy makers talk and act as if only one of those two outcomes truly terrifies them: deflation. Japan has been in an on-again-off-again deflationary slump for decades, despite the BoJ now owning a good chunk of the Japanese stock market, many years of QE, and substantial deficit spending.
- bitshiftfaced 5y ago
  > Year-over-year comparisons reflect the abysmal economic conditions during the pandemic. We can instead look at the growth over 12 months from May and compare it to that of April. If anything, I'd expect a more pronounced effect for April's YoY because it starts nearer to the bottom of the market. But instead, May's YoY looks slightly higher than April's.
- whb07 5y ago
  All of these “technical” measures are the work of people trying to explain and come up with clever ways to argue for their jobs and continuous involvement in monetary experiments. I want deflation to occur. There are enormous sectors where deflation is seen and everyone sees the obvious benefits[0]. But when it runs up against the work of the state printing money to finance the destruction of society, then deflation is seen as dangerous. The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” This is clearly false as the wants/needs are a “now” problem, and the PhDs at the FED have never seen the lines for Black Friday to purchase TVs and other consumer electronics. Why buy an iPhone 12 when in 2 years that same iPhone will be 50% off? Not only that, there is also an increase in sales by volume which could lead to more profits by lowering the price of a widget. There are huge segments of consumers that would consume at a lower price point! [0] Electronics/computing is an extremely obvious sign of deflation. Prices lowered, or goods improved and everyone benefits.
AuInsect 5y ago
Thats from May2020 to May2021, and includes a collapse in consumption (for example fuel). Look at chart 1: Apr2021 had 0.8% month to month May2031 had a 0.6% month to month. Which annualize ((1+i)^12) to: 10% and 7% respectively. Or, a better estimate: ((1.008)*(1.06))^6=1.087 Or 8.7% annualized inflation using the data of the last two months.
wdb 5y ago
If only my salary would raise with inflation...
Dmitriysz 5y ago
FED: The risk of inflation is low CPI rises 5% yoy FED: inflation is transitory CPI only rises 4% next time FED: see, we told you

100 points by mariojv 5y ago

From what baseline? The pandemic dip? Or pre-pandemic levels? Here's some actual journalism: https://jabberwocking.com/the-price-of-bacon-is-up-8-1/ https://jabberwocking.com/the-price-of-bacon-is-up-8-1/

prepend 5y ago
This is the CPI, it’s measured the same way it always is. There’s value in watching it, not sensationalizing it. The 12 month rolling chart straight from BLS [0] I think provides more info. And if you want more trends than just prices against the previous year, you can look at the absolute chart for some of the items they track [1]. Check out how bananas and electricity haven’t changed in 20 years, woot! [0] https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri... [1] https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri...
- splatcollision 5y ago
  Yep remember who owns the WSJ and what their agenda is. Replace WSJ with any news outlet!
- yrro 5y ago
  [1] should be https://www.bls.gov/charts/consumer-price-index/consumer-price-index-average-price-data.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri... I think
  - prepend 5y ago
    Yes, thank you. That’s the right link!
- sagarm 5y ago
  The price of gasoline is incredibly volatile. It regularly hits 50% y/y change!
doitLP 5y ago
Thank you. Excellent little piece and yet another lesson in how bad even “gold-standard” news outlets are. It’s actually dangerous to report like this because major decisions are made off headlines like that every day.

lumost 5y ago

China has grown successfully with inflation ranging from 5-15% over the last 3 decades. If inflation maintained a persistent 5%+ clip over the next 10 years how would that effect VC funding and startup formation?

bko 5y ago
No it hasn't. https://www.macrotrends.net/countries/CHN/china/inflation-rate-cpi https://www.macrotrends.net/countries/CHN/china/inflation-ra... Year Inflation Rate (%) Annual Change 2019 2.90% 0.82% 2018 2.07% 0.48% 2017 1.59% -0.41% 2016 2.00% 0.56% 2015 1.44% -0.48% 2014 1.92% -0.70% 2013 2.62% 0.00% 2012 2.62% -2.93% 2011 5.55% 2.38% 2010 3.18% 3.90% 2009 -0.73% -6.65% 2008 5.93% 1.11% 2007 4.82% 3.17% 2006 1.65% -0.13% 2005 1.78% -2.05% 2004 3.82% 2.70% 2003 1.13% 1.86% 2002 -0.73% -1.45% 2001 0.72% 0.37% 2000 0.35% 1.75% 1999 -1.40% -0.63% 1998 -0.77% -3.56% 1997 2.79% -5.53% 1996 8.31% -8.48% 1995 16.79% -7.47% 1994 24.26% 9.65% 1993 14.61% 8.26% 1992 6.35% 2.80% 1991 3.56% 0.50% 1990 3.05% -15.19% 1989 18.25% -0.57% 1988 18.81% 11.58% 1987 7.23% 11.58%

tryptophan 5y ago

Oh no! The experts told me that the record April inflation was a one time thing. The dollar index also shows that the dollar is down ~10% in value since 2018-2020. Which is concerning, because the USA is the strongest economy so you would expect people to flee to the dollar in times of crisis, pushing up its value.

flunhat 5y ago
We're in a crisis?
- nO0b 5y ago
  Nah, what could go wrong? https://www.tradingview.com/symbols/FRED-M1/ https://www.tradingview.com/symbols/FRED-M1/
  - gen3 5y ago
    The M1 is visually deceptive because how it was calculated changed, leading to the spike. The M2 provides a better overview: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
    - symlinkk 5y ago
      Is that supposed to make me feel better? It looks like 10 years of dollars were printed in the last year?

deleted 5y ago

[deleted]

bko 5y ago

It's important to remember that inflation hurts the poor most. The wealthy will have their money in assets that may benefit from inflation (stock market up 30+% since pre-covid seem a little odd to anyone else?). The poor spend a larger percentage of their income on consumer goods that will most likely be affected. Inflation is a nefarious way to finance spending without hidden consequences and distortions.

creddit 5y ago
Depends on how much debt the poor have.
- bko 5y ago
  I don't see your point. I guess you assume inflation will also translate the higher wages so that people would be able to pay off their debt? Inflation will lead to higher rates so you won't be able to refinance or get a cheap mortgage. This will drive home prices down which may or may not offset the increase in interest expense. Here's credit card debt based on income. I'm guessing most of this debt is a kind of rolling balance for regular expenses. I doubt wages would be able to keep up w/ consumer prices. I don't think people think inflation will somehow get them out of their debt if they're using it for every day purchases that have now become more expensive $290,000 and more – $12,600 $152,000 to $290,999 – $9,780 $95,00 to $151,999 – $6,990 $59,000 to $94,999 – $4,910 $35,000 to $58,999 – $4,650 Less than $34,999 – $3,830 https://www.debt.org/faqs/americans-in-debt/demographics/ https://www.debt.org/faqs/americans-in-debt/demographics/
  - bidirectional 5y ago
    Inflation erodes the value of debt.
  - syops 5y ago
    Inflation makes existing debt easier to pay off. It doesn’t make acquiring new debt easier.
  - 5y ago

gruez 5y ago

It's worth noting that it's 5% annualized, ie. if inflation kept growing at the same rate for a year, it would be 5%. Prices didn't actually rise 5% in one month. edit: it isn't annualized, but rather YOY edit2: annualized == YOY, so either statement is correct

sp332 5y ago
Thank you, that was my first question from reading the headline.
frob 5y ago
I'm not even sure it's that. The stated metric is how much prices have risen since May 2020. So it is the year-over-year change, but the baseline is a very weird covid-May.
- lumost 5y ago
  A common statement on short-term inflation is that most suppliers have roughly year long contracts which lock in prices. There have been large liquidity injections since April of 2020, it's possible that we're looking at a very weird covid April/May + inflation.
- seanmcdirmid 5y ago
  I didn’t notice pricing being especially weak last year beyond gas in May 2020, quite the opposite actually, at least in my area.
  - thehappypm 5y ago
    Did you do a lot less shopping in May 2020 than normal? Less shoppers risking it at Best Buy might have led to lower prices, but selection bias means a lot of us good citizens who stayed inside didn't see it.
    - seanmcdirmid 5y ago
      Not really. But then again, we mostly shop for food, which is where I noticed most of the price increases. I would say our grocery bill is now around 30% higher than it was pre-pandemic.

ReptileMan 5y ago

Where I live food and basics have jumped from 20 to 50 percent in the last few months. The measures just needed one year to go trough the chain.

airhead969 5y ago
Meat prices temporarily increased sharply, but will likely subside over time with increased supplies.

MrPowers 5y ago

The Consumer Price Index (CPI) is a measure of inflation and you should be aware of the adjustments it makes to accurately interpret the measure. It uses "owner equivalent rent" instead of housing prices and makes substitutions for example. Rob Arnott poked fun at the index a few years ago when they substituted chicken for beef. It's incredible to reflect on how different the macro landscape is now compared to the last time inflation was this high. In 1984, inflation was 4%, the long bond yield was 14%, and the cyclically adjusted priced to earning ratio was 10. Now, the long bond yield is 2.3% and the CAPE is 37.4. Real long bond yields (nominal yield minus inflation) have gone from 10% in 1984 to -2.7% now. The yield on Treasury Inflation Protected Securities is negative, see the government website: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...

mrcode007 5y ago
FOMC doesn’t look at CPI. They use CPE: https://www.bea.gov/data/personal-consumption-expenditures-price-index https://www.bea.gov/data/personal-consumption-expenditures-p...

axaxs 5y ago

I feel like all these numbers are bogus. Housing? Seeing as it's nearly half of people's spending, I feel it should be weighted appropriately. And if so, real prices would be closer to 20% inflated in most markets YOY.

spaetzleesser 5y ago
Add education and health care to this and you get some pretty serious numbers.
staticman2 5y ago
Half of people certainly are not buying houses in any year.
- woodruffw 5y ago
  "Half of peoples' spending" presumably means "roughly half of individual post-tax income goes into housing costs," not "roughly half of individuals buy a new home each year." I don't know whether that number is true or not, but it doesn't seem implausible given mortgages and rent.
- archon 5y ago
  At least half of people are involved in the housing market, not just immediate buyers. Because you’d better believe if residential property prices skyrocket, so will rental rates.
  - staticman2 5y ago
    My point is when you own a house your expenses don't skyrocket because your neighbor sold a house for a 30% higher price this year than your other neighbor last year. Houses may or may not be half of people's spending like the poster above claimed, but homeowners generally do not see prices inflate when a small portion of their neighbors buy or sell homes. So whether or not housing is 50 percent of people's expenses that doesn't mean 50 percent of expenses have been subject to inflation.

nimbius 5y ago

the reason wallstreet is poshing this as positive news is because investors react positively to the idea of pandemic recovery. most commenters have already proven this false. even if the 5% were true, it doesnt erase the billions in back-rent debt most americans are saddled with due to the eviction moratoriums. recovery IMO is still 2-5 years out. The reason you should be seriously concerned about this inflation is because the fed never backed off quantitative easing from 2008, and in doing so has created a corporate credit bubble. To combat inflation in 2021, all they can do is hand-wave and insist this is "transient" inflation. nudging interest rates would cause a corporate debt crash. https://en.wikipedia.org/wiki/Corporate_debt_bubble https://en.wikipedia.org/wiki/Corporate_debt_bubble

TechBro8615 5y ago
> doesnt erase the billions in back-rent debt most americans are saddled with due to the eviction moratoriums “Most” Americans? Surely it’s not even close to 50%. Source?
- adventured 5y ago
  The parent is sensationalizing, to put it mildly, when they say "most." The figure is closer to 3%-5% of US households that are severely upside down on rent payments. The total sum estimates range widely from around $10 billion to $50 billion. Nobody seems to have a great handle on the figure, landlords don't report this information cleanly to a single source such that we can put it all together easily. You'll see Bloomberg, Reuters, housing organizations, et al. reporting (speculating) in that $10b to $50b range across the past 6-8 months of time (they largely forward speculate based on when the financial hammer has been expected to fall, or begin falling). There are around 123 million households in the US. 3% of that figure is 3.7 million households. That's $9,459 per household in that group in back rent if the sum is $35 billion. That's in the right universe in terms of making sense.

aazaa 5y ago

Two words: base effects. Year-over-year comparisons reflect the abysmal economic conditions during the pandemic. It's like comparing your current net income to one year ago but one year ago you were unemployed and paying off student loans while today you have a job at Google. The comparisons to watch are month-over-month (MoM). The BLS reports MoM CPI increased 0.6%, after a 0.8% MoM increase in April: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm So the rate of CPI change is negative MoM. From the same page, BLS reports CPI less food and energy fell MoM from 0.9% in April to 0.7% in May. The real headline here should be that inflation is slowing on a MoM basis. It's that rate of change of inflation that matters. If it remains negative (disinflation), then price increases will continue to subside. But if CPI growth remains negative for long enough, it can translate into deflation. That's not an outcome being discussed widely now, and for that reason (among others) it should be considered seriously. Policy makers talk and act as if only one of those two outcomes truly terrifies them: deflation. Japan has been in an on-again-off-again deflationary slump for decades, despite the BoJ now owning a good chunk of the Japanese stock market, many years of QE, and substantial deficit spending.

bitshiftfaced 5y ago
> Year-over-year comparisons reflect the abysmal economic conditions during the pandemic. We can instead look at the growth over 12 months from May and compare it to that of April. If anything, I'd expect a more pronounced effect for April's YoY because it starts nearer to the bottom of the market. But instead, May's YoY looks slightly higher than April's.
whb07 5y ago
All of these “technical” measures are the work of people trying to explain and come up with clever ways to argue for their jobs and continuous involvement in monetary experiments. I want deflation to occur. There are enormous sectors where deflation is seen and everyone sees the obvious benefits[0]. But when it runs up against the work of the state printing money to finance the destruction of society, then deflation is seen as dangerous. The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” This is clearly false as the wants/needs are a “now” problem, and the PhDs at the FED have never seen the lines for Black Friday to purchase TVs and other consumer electronics. Why buy an iPhone 12 when in 2 years that same iPhone will be 50% off? Not only that, there is also an increase in sales by volume which could lead to more profits by lowering the price of a widget. There are huge segments of consumers that would consume at a lower price point! [0] Electronics/computing is an extremely obvious sign of deflation. Prices lowered, or goods improved and everyone benefits.

AuInsect 5y ago

Thats from May2020 to May2021, and includes a collapse in consumption (for example fuel). Look at chart 1: Apr2021 had 0.8% month to month May2031 had a 0.6% month to month. Which annualize ((1+i)^12) to: 10% and 7% respectively. Or, a better estimate: ((1.008)*(1.06))^6=1.087 Or 8.7% annualized inflation using the data of the last two months.

wdb 5y ago

If only my salary would raise with inflation...

Dmitriysz 5y ago

FED: The risk of inflation is low CPI rises 5% yoy FED: inflation is transitory CPI only rises 4% next time FED: see, we told you