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It is incredible to me how few people understand this. Particularly people with finance backgrounds that should know better. The June 2022 CPI showed an increas
by rzimmerman 3y ago
It is incredible to me how few people understand this. Particularly people with finance backgrounds that should know better. The June 2022 CPI showed an increase of over 1.2% (just in June!), equivalent to about 13% inflation at a yearly rate. The last few months have all been in the 0.1%-0.4% range.
Even if you just assume that June 2022 is roughly in-line with March/April/May, that means the June 2022 1.2% falls off the moving average and is replaced with something in the 0.1%-0.4% range. So of course YoY inflation decreases from 4% to 3%. It's just a moving average. Moving averages and YoY numbers make sense to cancel out seasonality and noisy monthly numbers when things are regular. But if there's say, a massive spike in inflation due to supply chain issues, well it's going to take a full year for that spike to disappear from the yearly moving average.