InflationData.com

Your Place in Cyber Space for Inflation Data

Current Consumer Price Index (CPI-U) 264.877 | Current Annual Inflation Rate 2.62% | Released April 13, 2021 for the year ending March 2021 | Next Data Release May 12th 2021 |

Today’s Featured Post

March Inflation Skyrockets

Monthly Inflation Table

Inflation Summary: Annual Inflation up from 1.68% in February to 2.62% in March. CPI Index rose slightly from 263.014 in February to 264.877 in March. Monthly Inflation for February was 0.55% and March was 0.71%. Next release May 12th Annual inflation for the 12 months ending in March was 2.62% We have been predicting Annual Inflation would shoot up in March due to higher gas prices and negative numbers falling out of the annual calculation. Further increases to come in April … [Read More...]

Latest Articles

A Stock Pickers Guide To Thinking About Inflation

Stock investors sitting on cash and watching the stock market soar to new highs shouldn’t be faulted for missing out on above-average historical returns in 2020. Inflation, along with increasing signs of a market bubble, is a growing area of concern so the prospect of investing in tech giants valued at more than $1 trillion isn’t as appealing as it once was.

But investors know that sitting on a portfolio near 100% in cash will see their net worth suffer as a result of inflation. To protect against inflation, investors should consider some of the most popular stocks as of April 2021 as some of them double as a hedge against inflation. 

How Inflation Can Effect Rising Prices

UK Money House

Let’s look at money supply, purchasing power, the velocity of money, loans, and interest and how they all affect consumers.

February Inflation Increases 20% over January

Fed Total Assets Long Term 3-2021a

The CPI index itself was up from 261.582 in January to 263.014 in February. Resulting in a monthly inflation rate of 0.55% which replaced February 2020’s 0.27%.

Annual inflation for the 12 months ending in February was 1.68%, since the BLS rounds their numbers they report it as 1.7%.

Setting the Stage for Inflation

Due to the Corona Virus, March and April 2020 were -0.22% and -0.67% respectively, resulting in a massive disinflationary environment.  When these numbers fall out of the Annual inflation equation in 2021 we can expect a massive jump in the annual inflation rate. If for instance March 2021 comes in at only 0.28% that would take the annual inflation rate up to 2.18%. If however, March is a more normal 0.50%, we could see March’s Annual inflation at 2.4% (a 40% increase over February) and recent high gas prices could drive it much higher. April 2021, could easily see inflation jump to 3.4% (almost double the current inflation rate). Even in the unlikely event that we see Zero monthly inflation in March and April 2021, the Annual inflation rate will still jump up 0.89% (almost 1%) since those negative numbers will no longer be pulling the average down.

January Inflation Setting Stage for Big Run Up

Monthly Inflation Table January-2021

The CPI index itself was up from 260.474 in December to 261.582 in January. Resulting in a monthly inflation rate of 0.43%. Annual inflation for the 12 months ending in December was 1.36%, the 12 months ending in January was 1.40%. Since the BLS rounds their numbers they report both as 1.4%.

Setting the Stage for Inflation

Due to the Corona Virus, March and April 2020 were -0.22% and -0.67% respectively, resulting in a massive disinflationary environment. When these numbers fall out of the Annual inflation equation in 2021 we can expect a massive jump in the annual inflation rate. If for instance March 2021 comes in at 0.28% that would take the annual inflation rate up to 1.9% (without any rise in February). If however, March is a more normal 0.5% we could see inflation well over 2% in March. And April could easily see inflation jump another 1%. Even if we see Zero monthly inflation in March and April 2021 the Annual inflation rate will jump up 0.89% (almost 1%) since those negative numbers will no longer be pulling the average down.

Price and Wage Changes since 2000

Price Changes 2000-2020

When we think about price changes we often think of them in terms of the changes in the Consumer Price Index (CPI-U for all Urban Consumers). Looking at it that way we may get the idea that price movements are monolithic i.e. that they all move together, so “prices” were up 2% or 5% or whatever, over the last 12 months. But that is a bit misleading since prices all move independently. For this reason, the U.S. Bureau of  Labor Statistics publishes a CPI database with a breakdown of all the various components. By analyzing the various components of the CPI over the last 20 years we developed the following Chart.

Inflation Adjusted Gasoline Prices

Inflation Adjusted Gasoline Trend Chart

Without looking at inflation-adjusted prices it is difficult to see where gasoline prices actually stand. Back in 1918 gasoline was $0.25 a gallon and by 1932 prices had fallen to 18 cents a gallon! But as we all know over the last 100 years the purchasing power of the dollar has fallen drastically so in order to get the true picture we can’t just say that the lowest price of gas was 18 cents per gallon, we need to adjust the price for inflation. When adjusting for inflation there are two prices… the first is called the “nominal price” and that is the actual price you would have paid for gas at the pump. The key price though is the inflation-adjusted price which calculates what the price would have been if we were spending current dollars on a specific date. In this case, we are basing our calculations on the value of a dollar in January 2020.

Inflation Rate of Electricity Prices

Inflation Adjusted Electricity Prices

Electricity Price Inflation Residential electricity prices in the U.S. have risen from an average of 7.83 cents per kilowatthour in 1990 to an average of 11.44 cents per kwh in 2010. This is a 46% increase in 20 years and sounds like a lot but as you can see from the chart below for many years[Read More…]

Inflation Adjusted NYSE Index

Inflation adjusted NYSE Stocks 2013

Source: inflationdata.com | NYSE Index Inflation Commentary To Print this Chart: When Printer dialog box appears be sure to switch to Landscape mode Note: Please feel free to link to this page but not to the image itself as the image may be renamed (or deleted) when it is updated but the page URL will[Read More…]

Inflation Adjusted Natural Gas Prices

Your Ability to Choose Should Increase Competition In years past consumers didn’t have a lot of choice when it came to their natural gas supplier, they were tied to the local gas utility, so if they wanted to charge a 541% markup you were pretty much stuck. But just prior to the new millennium states began[Read More…]

Inflation Adjusted Housing Prices

Inflation Adjusted Housing Prices

Inflation Adjusted Real Estate Prices-  Lets take a look at the idea that housing prices always go up. Of course, each neighborhood is different, so some neighborhoods might be going down while a few miles away housing prices are skyrocketing but by looking at the nationwide average we can get a better picture of the overall trend. The St. Louis Federal Reserve publishes the following chart that shows the S&P/Case Shiller National Home Price Index and by adjusting those prices for inflation we can get a better picture of how real estate prices really act. Is a home a good investment or not?

Inflation Adjusted Bonds

Inflation Indexed Bonds

Inflation Indexed Bonds Performance- U.S. Treasury Inflation indexed bonds are supposed to protect you from the ravages of inflation while providing a safe and decent rate of return on your money. Obviously, since safety is generally inversely proportional to risk, if  inflation indexed bonds are very safe you would expect the rate of return to be[Read More…]

InflationData.com and its editors have been featured