Courtesy of Doug Short
The latest annualized inflation rate is 3.56%.
The May 2011 Consumer Price Index for Urban Consumers (CPI-U) released today shows an annualized inflation rate of 3.56%, which is fractionally below the 3.96% average since the end of World War II.
For a comparison of headline inflation with core inflation, which is based on the CPI excluding food and energy, see this new feature.
For better understanding of how CPI is measured and how it impacts your household, see my Inside Look at CPI components.
For an even closer look at how the components are behaving, see this X-Ray View of the data for the past five months.
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.
Alternate Inflation Data
The ShadowStats Alternate annulized rate of inflation is 11.13%.
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).
On a personal note, the more I study inflation the more convinced I am that the BLS method of calculating inflation is sound. As a first-wave Boomer who raised a family during the double-digit inflation years of the 1970s and early 1980s, I see nothing today that is remotely like the inflation we endured at that time. Moreover, 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 interesting but ultimately misguided statistic.
