We have all heard that inflation is getting worse. The number being quoted measures changes in the CPI during 2022 -- from December of 2020 to December of 2021 the rate of change of prices was about 7.5%. That number makes heads spin.
It has been decades since we have had inflation so high. In the year before -- 2019 to 2020 -- the inflation rate was 1.4%. Clearly in 2021 something was going on.
Most of the analysis I have seen is not very curious about these increases. My first notion was that maybe it all happened in one month. And it is true that the annualized inflation rate in one month was 10.1%. But that wasn't enough to make the whole year's rate of inflation go from 1.4% one year to 7.5% the next.
So I was curious. If it had to do with Covid then maybe we had high inflation in most months. So I decided to look at all the months of 2021 to see what the data had to say.
Jan/Feb averaged 5.8%
March to June averaged 9.8%
July to September was 3.8%
October to December 6.5%
The highest months were March, April, May, June, and October. They ranged from 9% to 11%.
The rest of the months the inflation rate ranged from a low of 2.5% to a high of 6.6%.
These numbers have already been adjusted for regular seasonal patterns. So we can't blame the differences on regular seasonal patterns.
But it does make us wonder about 2021 and the future. The worst inflation of 2021 came from March to June. But that was followed by a quarter of much lower inflation. Inflation then increased in the final quarter of 2021 but did not reach previous highs.
Maybe the worse is over. Maybe not.
While this kind of analysis is not perfect and it proves nothing -- I enjoy doing it because the press and the government are so bad at breaking down the news. They would rather scare us with screaming about the worse inflation in decades than take a honest look at what the data says.
Dear LSD. Here is a multi-tail tale from the Tuna pertaining to the topic of your blog . . . that be ‘flation. Me tinkz you seem somewut blasé ‘bout sed ‘flation ‘n maybe you tink it’s not so bad. Yer comment that the govomit ‘n lame-brane press’s screaming scares us ‘bout the worstest and highest ‘flation in yerz has merit . . . ‘n yer second paragraph duz say “ . . decades since we’ve had inflation so high.” So it’s quizzical which you tink is so. Me tinks it’s gunna git bad.
ReplyDeleteCovid induced disruption to supply chains raised prices . . . ‘n history shows prices verwry slow to come down . . . they’ll be ‘round fer quite a while. My Home Depot, grocery, and chardonnay ☹ purchases attest to higher prices. Lying, cry’n, plageriz’n, basement-dwelling Joe the eunuch decimated U.S. oil production ‘n is buying $105/bbl oil from Putin. Oil/energy/gasoline costs are an integral input into the production/distribution of our goods, heating, ‘n transportation. Labor shortages are rais’n labor costs. ‘N to boot, irritable bowel Powell is gunna have to raise rates ala Volcker to tamp down ‘flation = higher taxes fer servicing the increasing $30T national debt. All combined thus increasing the cost-of-living across the board.
Yeah, me tinkz ‘flation is bad ‘n gunna git badder. But, hey, ‘appy ‘our only 40 minutes away! Cheerz!
Good work Tuna. Your description of what can happen is what a lot of folks are saying. I am not so convinced though I realize I am taking a contrary opinion. My point is that while measured inflation is high right now, I am not so convinced it has to lead to higher entrenched waves of inflation. I guess we will see.
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