CPI Up 2.2% Over Last Year
The CPI numbers are out. According to our trusty government officials, prices rose 2.2% from April 2009 to April 2010. Of particular interest is that the “energy” component of the CPI is up 18.5% for that 12-month period.
Now I know some of you are mad for two reasons:
(1) I keep making forecasts instead of sticking to a priori analysis, and
(2) I keep citing bogus government numbers, when the true price inflation rate is much higher.
In response, all I can say is that it would be a bloodless economic theory if it never gave you the confidence to say, “Holy cow, we are moving in a terrible direction here, and the government is setting us up for disaster.”
Also, I am using the government’s numbers because I don’t want to look like I’m just arguing with definitions. If and when the price inflation comes that I have been expecting, we’re not going to need to decompose seasonal adjustments, hedonic indices, and the like; it’s going to be obvious. The reason I use the government’s own figures is that they don’t support the official narrative. Look, from April 2003 to April 2004, CPI rose about 2.3%. We didn’t fall into a deflationary black hole then, and the monetary base didn’t look like this at the time.
In regards to the 18.5% energy increase, just to verify, that’s the “food and energy prices?” I see it in this article as-well.
http://www.breitbart.com/article.php?id=CNG.f4ca4a183df2102e9ad9338f1c9b7c75.171
So the government doesn’t include “food and energy” in there CPI numbers?
Food prices are soaring in other ways as well. For example, I am finding less offerings in canned food for no decline in price. Burgers which used to cost a dollar or more are as high as 2.51 CAD.
It’s time for Bob Murphy to start his own inductive survey regarding food prices.
Bob,
Could you explain a bit more about what you mean when you said, “the reason I use the government’s own numbers is that they don’t support the official narrative.” Thanks,
Robert
Mr. Murphy,
Where would you say the best place to buy silver bullion is?
Thanks
APMEX
What infuriates me… People (including the WSJ) just keep citing the Core CPI, and saying “Inflation is under 1% year over year!!!”
I’m okay with using Core CPI for month-to-month. Food and energy prices are volatile, and it’s very possible that one month’s increase will be wiped out by the next month’s decrease. But, using Core CPI for year-over-year changes? That’s fine if we’re Amish and anorexic. For most of the population, food and energy are pretty significant expenses.
“It’s time for Bob Murphy to start his own inductive survey regarding food prices.”
There already is a substitute index called the Jar Of Pickles/Package Of Muffins index, which is based on Costco’s Mt. Olive large pickle jars and WalMart’s brand English muffins. It’s up catastrophically over the last several years, hovering around 50% in total.