Annual inflation for the 12 months ending in May 2017 was 1.87%. Inflation has steadily moved lower month by month from its peak of 2.74% in February. First falling to 2.38% in March, then down to 2.20% in April, and finally 1.87% in May. Although Inflation has fallen it is still slightly above its 12 month moving average (Red Line) indicating that the short-term trend is still up, although the gap is closing, a cross below the moving average would indicate that the short term trend has switched to "down". Since 2008, there has been a battle between inflation and deflation with the FED fighting against deflation. In March, the FED has switched sides and is raising interest rates. On … [Read more...]
Effects of Inflation on Businesses
When we think of inflation we usually think of how it affects us as consumers. But the effects of inflation are wide ranging, including not only individuals but also businesses and even countries. Consumers and businesses alike have to deal with the impact of inflation, both good and bad. Here are some ways in which inflation affects businesses: 1. Consumer Purchasing This is the most obvious impact to businesses. Rapidly rising prices will cause consumers to (as Samuel Goldwyn famously said) "stay away in droves". There are ways for businesses to plan for inflation to reduce the chances of revenue loss. Gradually increasing prices will prevent a sudden price hike, and if your … [Read more...]
March Inflation: Can 2 Wrongs Make a Right?
Back in February (based on January data) our Moore Inflation Predictor (MIP) forecast that March's inflation rate would be between 2.41% and 2.63% and today the Bureau of Labor Statistics said that March's annual inflation rate was 2.38%. So we were pretty close but how we got here is another matter entirely. In this case, two wrongs actually did make a right. As you can see from the chart below (we added a reality line to show what actually happened) first the inflation rate shot way above our projection and then it shot slightly below like some sort of drunk driver over-compensating while trying desperately to stay on the road. You can see what our MIP is projecting now … [Read more...]
Inflation Reaches Highest Level in 5 Years
On Wednesday March 15th the U.S. Bureau of Labor Statistics (BLS) released their monthly Inflation report for the 12 months ending February 28th . The Consumer Price Index (CPI-U) came in at 243.603 up from 242.839 in January. This resulted in a 0.31% monthly inflation and 2.74% annual inflation. The last time the annual inflation rate was this high was in February of 2012 when it was 2.87%. After a deflationary period from March through October 2009, massive quantitative easing, caused a 2 month flirtation with inflation nearing 3% but then inflation promptly fell and by June 2010 inflation was 1.05% again. The inflation rate spent the next several months bouncing around between 1% and … [Read more...]
Inflation Skyrockets to 2.5% In January
Annual Inflation is up from 2.07% in December to 2.5% in January. January itself racked up a whopping 0.58% monthly inflation rate. The Bureau of Labor Statistics released the newest inflation numbers on for January on February 15th 2017. Their Consumer Price Index (CPI-U) for all Urban Consumers was 242.839 up from 241.432 in December. Annual Inflation Chart Annual inflation is up from the annual cyclical low of 0.84% in July 2016, August was 1.06%, September rose to 1.46% and October was 1.64%. This is also up from the longer term cyclical low of -0.20% in April of 2015. Although this may look like the beginning of a longer upward trend it is still possible that it is simply a … [Read more...]
December Inflation Rate Finally Tops 2%
For quite some time, I've been saying, that "annual inflation throughout 2016 would remain well below the official FED target of 2% but we are getting closer and it is possible that December could tip the scale above 2%." And that is exactly what happened... annual inflation finished the year at 2.07%! The Bureau of Labor Statistics (BLS) released the data for the month of December on January 18th. They also adjusted four months of data from May through August 2016 due to some faulty data relating to Prescription drug prices but it had no visible effect on the published inflation rates and was only visible if you extended the calculation out to 3 decimal places. Annual Inflation … [Read more...]
November Inflation Up Slightly
The U.S. Bureau of Labor Statistics (BLS) released the monthly and annual inflation rate data for November 2016 on December 15th. The next data release is scheduled for January 15th. The current annual inflation rate is 1.69% up from 1.64% in October. Monthly inflation was actually negative for November but "less negative" than in 2015 causing the Annual Inflation rate to rise. Inflation for the month of November 2016 was -0.16%, while November 2015 was -0.21%. The CPI index was 241.353 in November 2016 down from 241.729 in October. Current Annual Inflation Chart Annual inflation for the 12 months ending in November 2016 was 1.69% up from a cyclical low of 0.84% in July. August was … [Read more...]
Inflation Climbs Again in October
The U.S. Bureau of Labor Statistics (BLS) released the monthly and annual inflation rate data for October 2016 on November 17th. The current annual inflation rate is 1.64% up from 1.46% in September. Monthly inflation was 0.12% for the month of October 2016, while October 2015 was -0.14%. meaning that as the negative number fell out of the calculation and was replaced by a positive one, annual inflation jumped up. Historically, the 4th quarter, i.e. October, November and December have been negative inflation months i.e. disinflationary. So having positive inflation for the month of October is a bit unusual and could indicate a trend toward rising inflation or it could simply be the … [Read more...]
Annual Inflation Up Slightly in August
The U.S. Bureau of Labor Statistics (BLS) released their monthly inflation report for August on September 16th. According to the BLS Annual Inflation rose from 0.84% in July to 1.06% in August bringing inflation back in line with the levels in April through June. Inflation was 1.13% in April, 1.02% in May, and 1.01% in June. However, the rise was not due to high monthly inflation. Monthly inflation was only 0.09% for August 2016. Rather annual inflation rose because August 2015's -0.14% fell out of the equation. Interestingly, if last month's monthly inflation of -0.16% .was swapped with this month's 0.09% the Annual Inflation rate would have been much more stable. The rate would look … [Read more...]
May’s Low Inflation, the Price of Gold and More
The U.S. Bureau of Labor statistics released the May inflation data on June 16th. Annual inflation fell from 1.13% in April to 1.02% in May. The Consumer Price index crept up to 240.236 from 239.261. Monthly inflation was 0.41% (40% of the total annual inflation). The primary factor in the increase was energy costs, gasoline was up 2.3% while fuel oil was up 6.2%. Many other items were actually down... airfares down -1.5%, used cars and trucks down -1.3%, food at home down -0.5%, of course physicians services and motor vehicle insurance were up 1% and 0.9% respectively, along with apparel which was up 0.8%. Current Annual Inflation Chart We’ve updated the current annual inflation chart … [Read more...]
