According to the BLS, it decreased last month.
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent in November, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The November level of 201.5 (1982-84=100) was 2.0 percent higher than in November 2005.
But producer prices were much higher last month:
The Producer Price Index for Finished Goods advanced 2.0 percent in November, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This gain followed declines of 1.6 percent in October and 1.3 percent in September. The index for finished goods other than foods and energy rose 1.3 percent in November compared with a 0.9-percent decrease in the previous month. At the earlier stages of processing, prices for intermediate goods moved up 0.7 percent after falling 1.1 percent in the prior month, and the crude goods index increased 15.7 percent following a 10.5-percent decline in October.
According to the Bureau of Economic Analysis, the GDP deflator increased in the third quarter. This is a quarter to quarter comparison, whereas the PPI and CPI are month to month.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.2 percent in the third quarter, 0.1 percentage point more than in the preliminary estimate; this index increased 4.0 percent in the second quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the third quarter, compared with 2.9 percent in the second.
Then there is the personal consumption expenditure (PCE) released yesterday:
PCE prices -- The price index for PCE increased less than 0.1 percent in November, in contrast to a decrease of 0.2 percent in October. Prices, excluding food and energy, increased less than 0.1 percent, compared with an increase of 0.2 percent.
Finally, there is the Cleveland Fed's median CPI number
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (3.0% annualized rate) in November. The median CPI is a measure of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.
So -- all of these reports which are supposed to measure inflation all tell a different tale. The trick is to figure out which one is telling the truth, or which combination is telling the truth.
Right now I have no idea which one -- or which combination -- I like better. But, there are a lot of choices, aren't there?
4 comments:
Which inflation measure I use depends on what question I am trying to ask. If I am trying to ask what is happening to the real wage, then the normal CPI is best. And if, following the Post Keynesians, I use a base model of inflation based on the fight between wage income and profit income recipients over their share of national income, that is a key index to follow.
However, if I am trying to ask what is happening to production costs over and above wage costs, then the PPI is the best. If a regional Federal Reserve system bank is trying to guess what is going to happen to CPI in the medium term future based on what happened in the recent past, a "core" CPI inflation is the best, or perhaps the least bad.
And if I want to know what happened to prices on average over the whole economy, a GDP deflator is the best.
The concept of inflation is intrinsically vague ... a price increase for a specific product is specific, but as soon as we ask for an average of price increases, we get different averages for different weights. My cost of living is not directly affected by the cost of bulk aluminum, and the cost of production of a manufacturer of aluminum cans is not directly affected by the cost of a sweater appropriate to be seen in when teaching.
Bruce --
I see your points. Thanks
My totally unscientific observation: my paltry, but at least consistent 3% a year wage increase has not begun to cover the increase in my share of health coverage I have to pay. I now shop for groceries for two people, and pay as much per week as I used to pay for three just a couple of years ago. There is nothing I buy, from fuel to food, that has not steadily increased in price, and my wage has most certainly not kept up. Statistics are all fine and good, but those I deal with on a daily basis are increasingly pinched, were definitely cutting back on Christmas this year, and I'm a teacher, so certainly not rich, but supposedly "middle class."
Bonddad,
It is my understanding that the CPI basket of goods/services has been modified in recent years so that it no longer contains 'energy' item(s). My understanding is that the stated justification is 'too much volatility'. What is your opinion about this? Does it misrepresent the economy as experienced by consumers? Is the stated justification reasonable? Should the new Democratic majority in Congress force a reversal of this policy decision?
For the record: I am retired, and am drawing Social Security, so the CPI-U controls the COLAs that I get. This issue isn't theoretical for me!
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