Thursday, January 13, 2022

We Just Had the Highest Inflation Rate in 40 Years But Was There Some Good News in the Numbers?

The CPI in Dec. 2021 was 278.802. That means that something that cost $100 in 1982 cost $278.80 in Dec. 2021 (see "Consumer Price Index Data from 1913 to 2022" which is linked on the side a bit lower down).

The CPI was 260.474 in Dec. 2020. So 278.802 is 7% higher than that. The last time inflation was at least that high was in 1981 when it was 8.9%. The next highest since 1981 was 6.1% in 1990. No other year reached even 5% since 1981 until last year. From 1991-2020, only 7 years were 3% or higher and only 1 reached 4%.

The CPI for all of 2021 was 270.970 while for 2020 it was 258.811. That would give us a 4.7% inflation rate (taking the average CPI over all 12 months for both years). Not as bad as 7%, but it is the highest rate by that method since 1991 when it was 5.4%.

The possible good news is that the increase in prices slowed down a bit in the last 3 months of the year. Here are the percentage increases in the CPI for the last 3 months of 2021

Oct) 0.83%   
Nov) 0.49%   
Dec) 0.31%

So the increases are getting smaller, although if you go up 0.31% every month for the whole year the inflation rate is 3.75%, above the target of 2% for the Federal Reserve Board (they actually use the PCE, not the CPI-see a related post How Does The Fed Prefer To Measure Inflation).

The following table shows the monthly inflation rates for the last 3 months of each year from 2010-2021. Hard to see any pattern, but often prices come down (when there is a negative sign) or don't rise much the last 3 months, so it could be that what we saw in 2021 was fairly normal. The CPI is seasonally adjusted. See Consumer Price Index from the Bureau of Labor Statistics.

 

 

Oct

Nov

Dec

2010

0.12%

0.04%

0.17%

2011

-0.21%

-0.08%

-0.25%

2012

-0.04%

-0.47%

-0.27%

2013

-0.26%

-0.20%

-0.01%

2014

-0.25%

-0.54%

-0.57%

2015

-0.04%

-0.21%

-0.34%

2016

0.12%

-0.16%

0.03%

2017

-0.06%

0.00%

-0.06%

2018

0.18%

-0.33%

-0.32%

2019

0.23%

-0.05%

-0.09%

2020

0.04%

-0.06%

0.09%

2021

0.83%

0.49%

0.31%

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