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Dumb question: If last month was 9% inflation, and the month before that was 7% inflation - does that mean we’ve experienced a 16% inflation?
by alberth 4y ago
Dumb question: If last month was 9% inflation, and the month before that was 7% inflation - does that mean we’ve experienced a 16% inflation?
- krembanan 4y agoNo, it's YoY, meaning from May 2021 - May 2022 prices rose 7%. From June 2021 - June 2022 prices rose 9%.
- paulpauper 4y agoPeople are getting confused by this The YOY is 7-9% The monthly change is around .5-.8% , so nowhere close to 16% 16% inflation in 2 months would be very, very bad!
- Ekaros 4y agoIt depends are you discussing percentage points or percentage. From 7% 10% rise is 0.7%.
- areyousure 4y agoIn case anyone is curious, the monthly change was 1.3%: https://www.bls.gov/news.release/archives/cpi_07132022.htm https://www.bls.gov/news.release/archives/cpi_07132022.htm
- nonameiguess 4y agoPutting aside the fact that the numbers are year over year and not month to month, that isn't how percentage increases work. If you have a quantity that goes up 9% and then goes up another 7%, it has then gone up (1.09 * 1.07) - 1 ~= 16.63%. This is how compounding works. In a single period, it doesn't make much of a difference, as you can see, it's barely more than 16%, but over many periods, compounding results in much greater cumulative growth than if you simply added the increases together.