The Bureau of Labor Statistics (BLS) released their monthly Consumer Price Index (CPI-U) and Inflation report for the year ending in June on July 17th. This resulted in 0.12% Annual Inflation. The BLS rounded this to .1% which of course is so small that almost any one of the deflationary months last year would cancel out all the inflation we've seen over the previous 12 months. The CPI-U index a year ago was 238.343 and is currently an almost identical 238.638. January through May 2015 saw deflation on an annual basis although each month was inflationary in and of itself. But due to the massive deflation of the fourth quarter of 2014, all the monthly inflation was cancelled out. However, … [Read more...]
Does the Consumer Price Index (CPI) Include Taxes?
Question: I have heard over the years that the CPI does not include taxes as one of its components. In other words, an increase or decrease in a tax rate is not considered a change in consumer prices/costs. Is this true? If so, how is this omission justified? Thank you, James Schmidt … [Read more...]
Define Inflation: What is Inflation?
Bureau of Labor Statistics Changes CPI
The Bureau of Labor Statistics (BLS) made changes of historical proportions this month by changing how the Consumer Price Index is reported. For the first time in history the BLS has begun reporting the Consumer Price Index to three decimal points. Their official statement is as follows: "Effective with this release, index levels are now published to three decimal places. Percent changes based on these three-decimal place indexes will continue to be published to one decimal place. " So for January 2007 the CPI-U index is now 202.416 rather than 202.4 but their official inflation rate is still 2.1% rather than the 2.08% that we calculate it out to. While I applaud the higher level … [Read more...]
