The Consumer Price Index increased 0.3 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent. However, it is more instructive to look at price increases on a sector by sector basis over the last 12 months. Outside of natural gas prices, there have been some pretty serious price increases for basics, including gasoline up 9.0 percent, food at home up 3.6 percent and apparel up 4.9 percent. In other words, it should be no wonder why you have the general sense that prices are climbing much faster than the reported 2.7 percent. For the things you buy on a regular basis, prices are going up much faster.
All items................................. 2.7
Food.................................... 3.3
Food at home...................... 3.6
Food away from home...... 3.0
Energy............................... 4.6
Energy commodities.......... 8.7
Gasoline (all types)........... 9.0
Fuel oil............................... 5.3
Energy services.................. -1.8
Electricity........................... .6
Utility (piped) gas service.. -9.1
New vehicles................... 2.5
Used cars and trucks......... 3.2
Apparel.............................. 4.9
Medical care commodities... 3.3
Shelter................................ 2.1
Transportation services..... 1.4
Medical care services....... 3.5
The Federal Reserve Bank of Atlanta has an interesting index called the Flexible Price CPI that's mainly composed of those things you buy regularly, which also happen to be the same items that have more frequent price changes (flexible if you will). Food, gas, and clothing being the most notable items.
ReplyDeleteCheck the graph at the bottom.
http://www.frbatlanta.org/research/inflationproject/stickyprice/
So that's probably the "real" inflation rate most people seem to notice on the day to day basis. Last year it got up to 9.23% (12-month change) at one point. Some months even had 20% annualized monthly changes. A lot of people like to say that the BLS is making up the numbers, but most likely you're only noticing the flexible items.
You can also see the sticky price CPI in the same page. The arbitrary cutoff point of what qualifies as a sticky item is an item that has a price change every 4.3 months or more. Notice how the sticky index a lot tamer and less volatile than the flexible price index. The big stickler here is the shelter component (it's in the sticky CPI). It's the biggest part CPI and is weighted more heavily (30%) than than the other stuff. That component has only grown 2.1% as you see in the Wenzel's post.
The latest numbers show the 12 month change for the sticky CPI at 2.18% and 3.68 for the Flexible CPI. The sticky items are given a total weight of 70% of the CPI while the Flexible CPI is 30% of the CPI. When you combine the two, you should unsurprisingly get the headline CPI.
Want to see inflation? Go buy some clothes. Clothes prices are outrageous.
ReplyDelete