The U.S. Bureau of Labor Statistics released the Annual Inflation Rate data for the year through the end of June on July 12th 2018. Annual Inflation is Up Annual inflation rate was 2.87% in June up from 2.80% in May, 2.46% in April, 2.36% in March and 2.21% in February. CPI-U was 251.989 in June, 251.588 in May, 247.867 in January and 246.524 in December. Monthly Inflation for June was 0.16% while May was 0.42%, April was 0.40%, up from 0.23% in March 2018. June 2017 was only 0.09% Next release August 10th Monthly Inflation: Annual inflation for the 12 months ending in June was 2.87% up slightly from May's 2.80% but up sharply from April's 2.46%. Current levels are … [Read more...]
What Impact (if any) Does Disruption have on Inflation?
What is "Disruption"? According to Dictionary.com: forcible separation or division into parts. a disrupted condition: After the coup, the country was in disruption. Business. a radical change in an industry, business strategy, etc., especially involving the introduction of a new product or service that creates a new market: 2018 is seeing our world change rapidly in so many ways some due to various disruptions. This has caused some people to ask if disruptions cause inflation. This year U.S. inflation as of June is up from 1.63% in 2017 to 2.80% in 2018. Inflation on a global scale is a percent or two higher at 3.15% in 2017, and projected to see out the year 2018 at 3.31%. … [Read more...]
Debt and Inflationary Pressures: A Lesson in Economic Interactivity
Does debt cause inflation? If so what kind of debt? Personal debt? Government debt? Corporate debt? And what exactly is inflation? In this article, we will look at all these issues. Price Inflation occurs when the cost of a representative basket of goods and services is rising. The key factor is the general trend that takes place in an economy, it is possible that individual items such as foreign automobiles, the price of coffee, or corn could rise while other items that require a larger portion of your disposable income are falling (or vice versa). So the Bureau of Labor Statistics uses a "weighted basket of goods" i.e. they calculate what percentage of an average person's salary goes … [Read more...]
Annual Inflation Up Sharply in May
The U.S. Bureau of Labor Statistics released the Annual Inflation Rate data for the year through the end of May on June 12th 2018. Annual Inflation is Up Annual inflation rate was 2.80% in May up from 2.46% in April, 2.36% in March and 2.21% in February. CPI-U was 251.588 in May, 250.546 in April, 249.554 in March, 248.991 in February, 247.867 in January and 246.524 in December. Monthly Inflation for May was 0.42%, April was 0.40%, up from 0.23% in March 2018. May 2017 was only 0.09% Next release July 12th Monthly Inflation: Annual inflation for the 12 months ending in May was 2.80% up sharply from April's 2.46% the increase was primarily because May 2017's … [Read more...]
Inflation Risk
What is Inflation Risk? Inflation Risk aka. "Purchasing Power Risk" is the risk due to "a decrease in purchasing power of assets or cash flow" due to inflation. A typical example would be a bond that generates a fixed rate of return. For instance, suppose this bond is worth $1000 and generates a 5% yield i.e. $50. Suppose when you purchase the bond that $50 will buy two tanks of gas for your car. Over time inflation will reduce the purchasing power of that $50 so it only buys one tank of gas. If you are counting on using the proceeds of the bond to buy gas there is an "inflation risk" that eventually you will not be covered. The worst-case example of inflation risk is if a country … [Read more...]
January’s Monthly Inflation 0.54%
The U.S. Bureau of Labor Statistics released the Annual Inflation Rate data for the year through the end of January on February 14th 2018. Annual inflation was 2.07% in January down from 2.11% in December CPI-U up from 246.524 to 247.867 Monthly Inflation for January 0.54% compared to 0.57% in January 2017 Next release March 13th Monthly Inflation is High, But... Typically the monthly inflation rate is highest during the first quarter (January through March) and lowest during the last quarter (October through December). January 2017 had inflation of 0.57% and so January 2018's 0.54% is right in line with that (resulting in annual inflation of 2.07%). However if … [Read more...]
Annual Inflation Rates Not Uniform Throughout the Country
Every so often I get a reader who writes a comment accusing me (although the numbers actually come from the Bureau of Labor Statistics) of underestimating the actual inflation rate. He reasons that, since his favorite bread cost $3.00 last year and now it costs $3.50... how can inflation possibly be only 2%? Typically my answer has been that individual items can change but actually cancel each other out. Such as in February 2015 when things like “meat, poultry, fish and eggs” increased 7.6% but energy prices fell enough to make the overall CPI slightly less than zero (i.e. deflationary). But this month we actually see evidence of another explanation. Annual Inflation for the year ending … [Read more...]
Monthly Deflation, Annual Disinflation
The U.S. Bureau of Labor Statistics released the Annual Inflation Rate data for the year through the end of December on January 12th 2018. Annual inflation was 2.11% for the 12 months ending in December CPI-U down slightly from 246.669 to 246.524 Monthly Inflation for December -0.06% Next release February 14th Annual Inflation Chart Annual inflation for the 12 months ending in December 2017 was 2.11% down from 2.20% in November and slightly above the 2.04% in October. Early in 2017 inflation was above current levels at 2.50% in January, 2.74% in February, 2.38% in March, and then falling to 2.20% in April. The annual cyclical low was 0.84% in July 2016. The longer term … [Read more...]
Zero Monthly Inflation, Annual Inflation UP
The U.S. Bureau of Labor Statistics released the Annual Inflation Rate data for the year through the end of November on December 13th 2017. Annual inflation was 2.20% in November up from 2.04% in October CPI-U up slightly from 246.663 to 246.669 Monthly Inflation for November 0.002% Next release January 12th Monthly Inflation is Essentially Zero If the annual inflation rate is negative that is called "deflation" (i.e. prices have gone down since the previous year) but whenever the monthly inflation rate is negative that is called "disinflation" (i.e. prices have gone down since the previous month). That is what happened in October 2017. This month the CPI-U … [Read more...]
How Oil Prices Affect Inflation
For a very long time, the prices of oil and inflation have been closely related to each other. When the value of the precious black liquid goes up, inflation follows in the same direction. The reason for this is because oil is a major commodity that's linked to a lot of things. Oil is used to heat homes, power public utilities, as well as run factories it is also a direct component in things like plastics. That being said, if the input cost for oil rises, so will the costs of finished products and services. The direct association between oil and inflation was first recorded in the 70s. It was at the time when the cost per barrel rose from $3 in 1973 to $40 in the 1979 oil crisis. This … [Read more...]
