Our usual presentation is to show the 12-month CPI prints as they are reported each month. We use January 2021 as our starting point because that is when inflation began to move up.*
From Trading Economics (also on blogroll at right), including today's 4.9% headline:
source: tradingeconomics.com
Another way to look at the numbers is the cumulative increase:
source: tradingeconomics.com
Looking at the cumulative increase, 16.44%, reminded me of this story from Yahoo Finance, March 22, 2023:
It’s been two years since inflation started to rise above the Federal Reserve’s target of 2% or so. At first, many economists thought elevated inflation would be “transitory,” or short-lived, since it stemmed at least in part from COVID-related supply-chain snafus that would eventually abate. President Biden was a member of Team Transitory, insisting in July of 2021 that higher prices would be temporary.
The inflation doves are in hasty retreat, given that it went as high as 9% last year. To get inflation down, the Federal Reserve has raised interest rates at one of the fastest paces ever, boosting its short-term lending rate by 4.75 percentage points in a mere 12 months, including the latest quarter-point raise on March 22. Inflation has dropped to 6%, but Fed Chair Jerome Powell has consistently said that’s not nearly good enough.
A new analysis by two prominent economists contains some advice for Powell: Just give it time. Robin Brooks, chief economist at the Institute for International Finance, and Peter Orszag, COE of Financial Advisory at Lazard, argue in the paper that much of the recent spike in prices is due to COVID-triggered supply-chain disruptions, and that normalization simply takes longer than many people expect. They also point to the considerable time lag in monetary tightening as justification for the Fed to take a “wait-and-see approach” by halting rate hikes and assessing the results of their work for several months, or even longer.....
....MUCH MORE
*We've been saying Sic Transit Gloria Mundi,
Everything is transitory. Thus passes the glory of the world,
For a couple years now. Literally.
In more carefree days gone by, we posted Sic Transit Gloria Monday and Sic Transit Gloria Money.
And just so you know we're no inflationistas-come-lately, we got lucky in December 2020 because we watch commodities, including food, prices.
December 29, 2020
St. Louis Fed: Food Prices As An Indicator Of Future Inflation
An interesting commentary, especially in light of the generations of Econ profs admonishing against putting much weight on headline inflation, as food and energy prices are volatile and should be stripped out to reveal core CPI and PPI trends.From the Federal Reserve Bank of St. Louis, January 1, 2002:....
We followed up on May 27, 2021:
"St. Louis Fed: Food Prices As An Indicator Of Future Inflation"
We first posted this paper on December 29, 2020 as a test of the thesis. At the time the UN's FAO Food Price Index had printed higher for six consecutive months. The correlation with coming CPI prices apparently held as we saw headline prints of 1.4% in the February report (January data), 1.7% YoY in March, 2.6% YoY in the April 13 report, and 4.2% earlier this month.
The FAO Food Price Index has now risen for eleven consecutive months. The month of May has been bearish for row crops so we will get to see if the correlations hold and/or see what lag/lead times might be. Remember, this is a test. Your mileage may vary. Close cover before striking...
The reference was repeated on September 6, 2021; and March 7 2022, interspersed with a hundred other inflation posts including September 14, 2021's:
CPI Rate of Increase Dips, Cheese Futures Unchanged
As scribblers around the world try to fit this morning's report into their preferred storylines, we're going to go with a kicky fromage fort because for some asinine reason I was looking at CME cheese futures when the Bureau of Labor Statistics made the release:
"CPI for all items rises 0.3% in August; gasoline, food, shelter among indexes rising"
And all I could think of was cheese dip.
You'll need 225g of assorted hard and soft bits of cheese, a clove of garlic, a bottle of white wine (60 ml for the recipe and the rest for you and yours)......Wait, where was I? BLS?....
Here's the May 10, 2023 release from the Bureau of Labor Statistics including the summary table and links to the deep dive tables.
