InflationData.com

Your Place in Cyber Space for Inflation Data

Current Consumer Price Index (CPI-U) 256.389 | Current Annual Inflation Rate 0.33% | Released May 12, 2020 for the year ending April 2019 | Next Data Release June 10th 2020 |

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Why Inflation Affects Various Individuals Differently

The cause and effect are both commonly called "inflation" which can cause some confusion. Typically, "Inflation" is defined as "an increase in the cost of a basket of goods over time". Technically this should be called "Price Inflation" which is often the result of "Monetary Inflation". As we have discussed in "What is Inflation", monetary inflation can also be referred to simply as "inflation." Inflation is a common phenomenon that affects millions of households every year. Let's look at how … [Read More...]

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April Inflation Near Zero

BLS CPI Table-a Apr 2020

Annual inflation for the 12 months ending in April was 0.33% a full 2% below February’s 2.33%. The CPI index itself fell to 256.389 down from 258.115 in March creating MONTHLY deflation although there was still slight ANNUAL inflation. Prices falling on a monthly basis but rising on an annual basis is called disinflation. Currently, the inflation rate is well below the FED’s target 2% rate and very near zero. The FED has dropped the FED Funds rate to virtually zero and has instituted massive quantitative easing.

Monthly Inflation:

According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.8 percent in April on a seasonally adjusted basis, the largest monthly decline since December 2008, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.3 percent before seasonal adjustment. A 20.6-percent decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The energy index declined mostly due to the decrease in the gasoline index, though some energy component indexes rose.”

What Causes Inflation? Rising Prices Explained

What is inflation

Economists say that there are 3 major causes of inflation. They are:

  1. Cost-Push Inflation
  2. Demand-Pull Inflation
  3. An increase in the Money Supply

But …

The 2008 Financial Crisis

The 2008 Financial Crisis

The 2008 crisis is the culmination of a series of missteps and failed legislation. Traditionally, lenders would only lend to “qualified buyers” but Congress decided that it would be a good thing to encourage homeownership so they instituted a series of changes to regulations allowing banks to shift some of the risk from the lender to the Federal Government. Specifically, to the three housing agencies Fannie Mae, Freddie Mac, and Ginnie Mae.

What are Central Banks?

Federal Reserve Bank Chicago

Like everyone, Kings like to spend money whether its to wage war or to build palaces, but they often didn’t have all the money they “needed”,  so they had to borrow it. To facilitate this large scale borrowing,  they created a Central Bank to handle that function. In 1790, Alexander Hamilton advocated for a Central Bank in the United States.

Both Thomas Jefferson and James Madison believed that the Constitution did not allow for it based on the 10th amendment i.e. that all powers not endowed to Congress are retained by the States (or the people). Despite objections, Congress passed the bill granting a 20 year charter to the “First Bank of the United States” which was modeled after the Bank of England and given a monopoly privilege of its notes being receivable in all tax payments to state and federal government, and no other banks were permitted to operate in the country.

March Inflation Crashes

Annual inflation for the 12 months ending in March was 1.54% down sharply from February’s 2.33% and January’s 2.49%. The CPI index itself fell to 258.115 in March from 258.678 in February creating MONTHLY deflation although there was still ANNUAL inflation. Prices falling on a monthly basis but rising on an annual basis is called disinflation. Currently, the inflation rate is below the FED’s target 2% rate.

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…]

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