3 ms·

> up 6.4% from a year ago Is this the correct way to refer to inflation percentage vs. last year? On the graph, it shows that inflation was 7.5% in Jan 2022.

> up 6.4% from a year ago Is this the correct way to refer to inflation percentage vs. last year? On the graph, it shows that inflation was 7.5% in Jan 2022. The wording makes it sound like it's now 7.5% + 6.4% = 13.9%.

ajross 4y ago
Neither are correct. Inflation is a year-over-year metric. Prices now are 6.4% higher than they were in January of 2022. Prices then were 7.5% higher than they were in January of 2021. In general it's not very informative to talk about a change in the derivative ("inflation rose"). But if you did, you'd have to talk about an immediate delta and not a YoY. So in fact, the headline is simply incorrect. CPI inflation was 6.5% in December. So in fact "inflation is dropping". But that doesn't get clicks.
- KoftaBob 4y ago
  The headline of the article itself more accurately describes what you're saying. Not sure if either the headline was changed, or the need to shorten the headline for HN's annoyingly restrictive character limit caused it to be confusing.
- FollowingTheDao 4y ago
  CORE Inflation is more important. Compared to December, the CPI rose 0.5%, the most in three months, mostly due to the higher cost of shelter, food, gasoline, and natural gas. And you think inflation is dropping? Also, if you look at the annual inflation rate, well; 2014 - 0.8% (!) 2015 - 0.7 (!) 2016 - 2.1 2017 - 2.1 2018 - 1.9 2019 - 2.3% 2020 - 1.4% (!) 2021 - 7% 2022 - 6.5% 2023 (so far) - 6.4% So, this means the FED will raise rates, by a lot. Because they cannot keep a 6.4% inflation rate going. And we have not had a business climate with inflation this hiugh for years. You can pretend like things are fine, but they are not.
  - lotsofpulp 4y ago
    You should put some money on your predictions, you stand to earn a ton as everyone else is thinking only a 0.25% increase is in the cards right now. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
    - dom96 4y ago
      How do you put money on such a prediction?
      - lotsofpulp 4y ago
        Trading futures options. https://finance.yahoo.com/quote/ZQ%3DF/futures/ https://finance.yahoo.com/quote/ZQ%3DF/futures/ https://www.cmegroup.com/markets/interest-rates/stirs/30-day-federal-fund.html https://www.cmegroup.com/markets/interest-rates/stirs/30-day... https://www.nasdaq.com/articles/you-can-trade-options-and-futures-on-the-fed-funds-rate-2021-06-17 https://www.nasdaq.com/articles/you-can-trade-options-and-fu...
- 1980phipsi 4y ago
  What makes you think inflation is a year-over-year (YoY) metric? At the end of the day, inflation is an increase in the general level of prices. Whether you use YoY or month-over-month (MoM) doesn't really change that. Now, you more commonly see YoY numbers cited because annualizing MoM numbers results in a lot of volatility. Seasonally adjusted MoM numbers are actually what the CPI report mentions first [1]. If you look at macroeconomic models, the inflation variable is typically defined as a one period change in prices (or potentially instantaneous, for continuous time models) as that makes the math easier to work with. [1] https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
  - 1980phipsi 4y ago
    I should probably add that I'm being a little pedantic. For your broader point, the journalists could more accurately say that "the year-on-year percent change in the CPI eased to x% from y%" to be more accurate, but I think most people who are reading it understanding that saying "inflation eased to x% from y%" to be a shorthand for that.

ajross 4y ago

Neither are correct. Inflation is a year-over-year metric. Prices now are 6.4% higher than they were in January of 2022. Prices then were 7.5% higher than they were in January of 2021. In general it's not very informative to talk about a change in the derivative ("inflation rose"). But if you did, you'd have to talk about an immediate delta and not a YoY. So in fact, the headline is simply incorrect. CPI inflation was 6.5% in December. So in fact "inflation is dropping". But that doesn't get clicks.

KoftaBob 4y ago
The headline of the article itself more accurately describes what you're saying. Not sure if either the headline was changed, or the need to shorten the headline for HN's annoyingly restrictive character limit caused it to be confusing.
FollowingTheDao 4y ago
CORE Inflation is more important. Compared to December, the CPI rose 0.5%, the most in three months, mostly due to the higher cost of shelter, food, gasoline, and natural gas. And you think inflation is dropping? Also, if you look at the annual inflation rate, well; 2014 - 0.8% (!) 2015 - 0.7 (!) 2016 - 2.1 2017 - 2.1 2018 - 1.9 2019 - 2.3% 2020 - 1.4% (!) 2021 - 7% 2022 - 6.5% 2023 (so far) - 6.4% So, this means the FED will raise rates, by a lot. Because they cannot keep a 6.4% inflation rate going. And we have not had a business climate with inflation this hiugh for years. You can pretend like things are fine, but they are not.
- lotsofpulp 4y ago
  You should put some money on your predictions, you stand to earn a ton as everyone else is thinking only a 0.25% increase is in the cards right now. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
  - dom96 4y ago
    How do you put money on such a prediction?
    - lotsofpulp 4y ago
      Trading futures options. https://finance.yahoo.com/quote/ZQ%3DF/futures/ https://finance.yahoo.com/quote/ZQ%3DF/futures/ https://www.cmegroup.com/markets/interest-rates/stirs/30-day-federal-fund.html https://www.cmegroup.com/markets/interest-rates/stirs/30-day... https://www.nasdaq.com/articles/you-can-trade-options-and-futures-on-the-fed-funds-rate-2021-06-17 https://www.nasdaq.com/articles/you-can-trade-options-and-fu...
1980phipsi 4y ago
What makes you think inflation is a year-over-year (YoY) metric? At the end of the day, inflation is an increase in the general level of prices. Whether you use YoY or month-over-month (MoM) doesn't really change that. Now, you more commonly see YoY numbers cited because annualizing MoM numbers results in a lot of volatility. Seasonally adjusted MoM numbers are actually what the CPI report mentions first [1]. If you look at macroeconomic models, the inflation variable is typically defined as a one period change in prices (or potentially instantaneous, for continuous time models) as that makes the math easier to work with. [1] https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
- 1980phipsi 4y ago
  I should probably add that I'm being a little pedantic. For your broader point, the journalists could more accurately say that "the year-on-year percent change in the CPI eased to x% from y%" to be more accurate, but I think most people who are reading it understanding that saying "inflation eased to x% from y%" to be a shorthand for that.