With the entire world struggling to ward off global deflation, it is prudent to understand why the current actions by the Central Banks are not heading in the correct direction. The massive amount of Quantitative Easing by the Central Banks, globally, have not been converted into inflation as was earlier anticipated. This article will shed light on various aspects leading to deflation. Investopedia defines ‘deflation’ as “a general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since … [Read more...]
January Inflation Up Sharply Should You Worry?
The U.S Bureau of Labor Statistics released their monthly inflation report today covering the 12 months ending in January indicating a massive jump in inflation. Should you worry? Current inflation (CPI-U) nearly doubled from 0.73% to 1.37%. The Consumer Price Index was 236.916 up from 236.525 in December. According to the BLS, the rate of decline for Energy has slowed a bit last month. Energy was down -12.6% in January, but only down -6.5% over the previous 12 months in February. Gasoline is only down -7.3% this month compared to -19.7% last month, while Fuel Oil is down -28.7% compared with -31.4% in December. The only energy commodity that is down more than previously is … [Read more...]
The Devaluation Derby
The 1930's had massive deflation on a world-wide scale. Making it the worst deflationary event in living memory. This has affected the thinking and even the language of everyone from economists, to politicians, to the media, as new words like devaluation, disinflation, low inflation, even negative inflation are created to avoid having to say what they really mean and that is the big "D"... DEFLATION. But no matter how you say it, the fact is, deflationary forces are building around the world. During the first quarter of 2015 the U.S. saw slight deflation on an annual basis. And despite historically low interest rates and high economic stimulus, in September 2015 the Financial Times posted … [Read more...]
Inflation Picks Up in December
The U.S. Bureau of Labor Statistics (BLS) published their current inflation (CPI-U) report for the month of December on January 20th. The Consumer Price Index was 236.525 down from 237.336 in November. With the index going down you would think that we would have deflation but because when we say inflation or deflation we are talking about annual inflation/deflation we need to compare the index to the index from a year previous. Since the CPI-U for December 2014 was 234.812 and the current index is higher, we had annual inflation of 0.73%. According to the BLS, over the last 12 months Energy Prices have fallen -12.6%. Specifically, Gasoline is down -19.7%, Fuel Oil is down -31.4% and … [Read more...]
Betting on Deflation May Be a Huge Mistake. Here’s Why…
Although this site is called Inflation Data for the last several years we have been talking a lot about the big "D"... deflation. Strictly speaking, the only true deflation (inflation rates below zero) occurred in 2009 and then very briefly in 2015. See Annual Inflation Rate Chart. But as the chart shows the overall trend since the peak in 1990 has been down with the occasional spike upward. Since the peak in September 2011 however, the trend has been sharply down (falling inflation rates = disinflation) until it bottomed in April 2015. Since then inflation has turned up and has crossed above its moving average. So does this mean that we are in for a bout of inflation? Possibly. … [Read more...]
58 Facts About The U.S. Economy From 2015 That Are Almost Too Crazy To Believe
There are a variety of ways to look at things and putting the pieces together is almost like looking through a kaleidoscope as we try to piece the facts together in order to get an accurate picture of the economy. Some of the pieces appear to indicate that the economy is getting better and some appear to indicate that the economy is getting worse. And just like the kaleidoscope the pieces change on a constant basis. At the moment the economy is clearly better than it was at the bottom of the crash in March of 2009 when the NYSE was near 4800. So the current levels of 10,000 looks good but... we have to remember that back in 2007 the NYSE was also at 10,000. So if we adjust 2007 … [Read more...]
Inflation UP, CPI Down for November
The Bureau of Labor Statistics (BLS) released their inflation numbers for the year ending November 30th on December 15, 2015. The Consumer Price Index (CPI-U) for November was 237.336 down from 237.838 at the end of October so overall prices declined -0.21% over the month but Annual Inflation was still up 0.50% (or ½%) for the year. This is the 4th month in a row where prices are lower than the previous month. In the table below we can see that last November the CPI was at 236.151. Then prices fell through January peaked in July and then fell to current levels. Month CPI-U Index Monthly Inflation Annual … [Read more...]
Are Oil Companies Ripping us off with Gas Prices?
With the steady decline in gasoline prices during 2015 people aren't too concerned with the price of gas anymore. But on occasion crude oil prices have fallen without the corresponding decline in gasoline prices. When this occurs someone always asks me if the prices are actually correlated or are the oil companies just ripping us off. This prompted me to create a chart comparing the price of crude oil to that of gasoline so you can see for yourself how well they correlate and I recently updated that chart. See the full article here: Gasoline vs. Crude Oil Prices. You might also enjoy: Are Low Crude Oil Prices a “Boom Or A Curse” For The World Economy? Includes: Top 10 Crude … [Read more...]
October… 0.17% Annual Inflation but -0.05% Monthly Deflation
The Bureau of Labor Statistics (BLS) released their inflation numbers for the year ending October 31st on November 17, 2015. Although Annual inflation was positive at 0.17% monthly inflation was negative (disinflationary) for the third month in a row. This is the result of the CPI index falling consistently from a high in July 2015 of 238.654. In August it was 238.316 resulting in a monthly inflation for August of -0.14%. September 2015 was 237.945 for a monthly inflation rate of -0.16 and then October 2015 was 237.832 resulting in monthly -0.04%. However, Annual Inflation was still positive in two of the three months, i.e. August through October were 0.20%, -0.04% and 0.17% respectively. … [Read more...]
Fuzzy Inflation Logic
I recently received a scathing comment from "Cameron" on an article I had written several years ago entitled Food Price Inflation Since 1913. In the article I presented an interesting table that compared the prices of various food items between January 1913 and January 2013. I actually thought it was quite a good picture of price comparisons over a 100 year period. Here is a portion of one of the tables presented: Click for Full Table. Cameron took exception to fact that some items like flour increased by 1488%. Because of that he accused me of sensationalism and not taking into account inflation. At first I was confused, after all isn't the whole table about inflation? Then … [Read more...]
