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Monday, February 26, 2024

Monthly Inflation Update

Monthly Inflation Update 

Courtesy of Doug Short 

The latest annualized rate is 1.15%.

The August 2010 Consumer Price Index for Urban Consumers (CPI-U) is 218.312. The annualized inflation rate computed from this number is 1.15%, which marks the tenth month of mild inflation after a streak of eight consecutive months of deflation. The annualized inflation rate is well below the 3.99% average since the end of World War II.

The Bureau of Labor Statistics (BLS) has compiled CPI data since 1913 (BLS historic data). Our chart now shows inflation back to 1872 by adding Warren and Pearson’s price index for the earlier years. The spliced series is available at Yale Professor Robert Shiller’s website. This look further back into the past dramatically illustrates the extreme oscillation between inflation and deflation during the first 70 years of our timeline. Click here for additional perspectives on inflation and the shrinking value of the dollar.

Click to View

Here is a link to an overview of inflation, recessions and the S&P 500 since 1950.

Alternate Inflation Data 
The latest annualized rate is 8.50%.

The chart below (click here for a larger version) includes an alternate look at inflation without the calculation modifications the 1980s and 1990s (Data from www.shadowstats.com).

Click to View
Click for a larger image

As I’ve expressed elsewhere, my opinion is that the optimum method for calculating consumer prices is probably somewhere between the revised BLS method and the historic method preserved by Williams. However, government policy, the Federal Funds Rate, interest rates in general and decades of major business decisions have been fundamentally driven by the official BLS inflation data, not the alternate CPI. For this reason I think it best to take the alternate inflation data as a interesting, but not authoritative. 

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