Consumer Price Index Rises 2.5%, fastest since February 2017
Consumer Price Index Rises 2.5%, fastest since February 2017 by Wolf Richter – Wolf Street
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Been reading misleading headlines about low inflation again? That is was “softer than expected” or whatever?
So here are the numbers: The Consumer Price Index (CPI) for April, which the Bureau of Labor Statistics released this morning, was 2.5% higher than a year ago. That increase may have been “lower than expected” – who’s doing the expecting? – but it was the fastest increase since February 2017. This chart shows the rising trend of inflation as measured by CPI:
Core CPI, which strips out the volatile food and energy components, was up 2.14% compared to a year ago. This may also have been deemed by the headlines “lower than expected,” but it was the fastest increase since February 2017:
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In the BLS press release near the top, which is where much of the media got hung up, it says this:
The indexes for household furnishings and operations, personal care, tobacco, medical care, and apparel all increased in April, while those for used cars and trucks, new vehicles, recreation, and airline fares all declined.
This refers to the seasonally adjusted changes from March to April. Monthly numbers are very volatile, and once they’re seasonally adjusted, they’re only as good as the seasonal adjustments. Making a headline out of seasonally adjusted month-to-month numbers can be misleading because headlines are all many people read.
For some perspective: Used vehicle CPI, which was one of the items mentioned by the BLS in the quote above, fell 0.4% in April from March not seasonally adjusted. The measure of used vehicle CPI is very volatile on a monthly basis. This chart shows the month-to-month percentage changes of used vehicle CPI not seasonally adjusted:
This chart illustrates that, in order to hammer this into a smooth line on a month-to-month basis, the index must be heavily seasonally adjusted – and what emerges at the other end is only as good as the seasonal adjustments.