Thursday, September 14, 2023

The Seasonally Adjusted CPI Was up 0.63% in August & 3.7% over the last 12 months

See Consumer Price Index for All Urban Consumers: All Items in U.S. City Average from FRED (Federal Reserve Economic Data) compiled by the Research Division at the Federal Reserve Bank of St. Louis for data on the seasonally adjusted CPI.

That site shows a graph but if you click on the Download button you will get the actual numbers in Microsoft Excel.

The Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL) was 304.348 in July and 306.269 in Aug. Since 306.269/304.348 = 1.0063, that means it was up 0.63% in July (media reports might say 0.20% due to rounding). If we had that every month for 12 months it would be up 7.8%.

It was 295.320 in Aug. 2022. Since 306.269/295.320 = 1.037, that means it was up 3.7% over the last 12 months.

The non-seasonally adjusted CPI was 307.026 in Aug. and 296.171 in Aug. 2022. That was up 3.67% since 307.026/296.171 = 1.0367. So pretty close to the seasonally adjusted CPI. This is still above the Fed's target of 2.0% (although they prefer to use the Personal Consumption Expenditures Price Index).

The table below shows the percentage increase in seasonally adjusted CPI over the previous 12 months. For example, it was just 1.39% higher in January 2021 than it was in January 2020. But in June 2022 it was 8.93% higher than it was in June 2021. There is some good news since this 12 month rate has been falling.

Jan

2021

1.39%

 

Jan

2022

7.60%

Feb

2021

1.69%

 

Feb

2022

7.95%

Mar

2021

2.63%

 

Mar

2022

8.52%

April

2021

4.13%

 

April

2022

8.23%

May

2021

4.92%

 

May

2022

8.50%

June

2021

5.28%

 

June

2022

8.93%

July

2021

5.22%

 

July

2022

8.41%

Aug

2021

5.19%

 

Aug

2022

8.23%

Sept

2021

5.38%

 

Sept

2022

8.21%

Oct

2021

6.24%

 

Oct

2022

7.76%

Nov

2021

6.86%

 

Nov

2022

7.14%

Dec

2021

7.19%

 

Dec

2022

6.44%

 

 

 

 

Jan

2023

6.35%

 

 

 

 

Feb

2023

5.99%

 

 

 

 

Mar

2023

4.99%

 

 

 

 

April

2023

4.96%

 

 

 

 

May

2023

4.13%

For more information, see Inflation continues to rise, but ‘the year-over-year numbers are pretty meaningless at this point,’ says economist—what actually matters by Mike Winters of CNBC. Excerpts:

Inflation is on the rise again, but it may not be as bad for your wallet as it sounds.

Here’s what’s happening: Driven by surging energy prices, the closely watched year-over-year inflation rate climbed from 3.2% to 3.7% in August, according to the Labor Bureau’s latest consumer index report. That’s still well above the Federal Reserve’s target rate of 2%, so it remains a concern.

However, the year-over-year rate should be taken with a grain of salt, as it no longer reflects the dramatic drop from peak prices in summer 2022.

This has created a distortion known as “base effects” where monthly price increases in 2023 seem more significant than they actually are, even though they’re growing at nearly half the rate we saw in 2022.

“The year-over-year numbers are pretty meaningless at this point,” says Daniel Altman, chief economist at Instawork, an online staffing platform. “What matters is the current path of prices.”

To better gauge where inflation is headed, the Federal Reserve says it’s closely monitoring core inflation, a measure of inflation that excludes volatile food and energy prices, which can fluctuate wildly in a given month.

When you look at this measure, inflation is trending in the right direction. In August, core inflation rose by 0.3% after increasing by 0.2% the previous two months. That’s less than half the monthly rate we were seeing in early 2022.

The sweet spot is about 0.2%, says Sarah House, economist at Wells Fargo. Wells Fargo expects overall inflation to continue cooling, with a forecast of 2.2% inflation in 2024, says House.

“We’re starting to see progress on on inflation,” she says. “But there’s still quite a bit of distance before we reach the overall target of 2%.”"

Other related links:

Consumer Price Index Data from 1913 to 2023

Personal Consumption Expenditures Price Index 

The Bureau of Labor Statistics makes seasonal adjustments. See Consumer Price Index Summary.

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