Current Annual inflation for the 12 months ending February 2023 is 6.04%
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Inflation is down from the June peak of 9.06%, but even moderate inflation can rapidly erode purchasing power and creates uncertainty as businesses have more difficulty estimating future costs.
Based on the Rule of 72 if inflation is 7.2% it will take roughly 10 years for prices to double. With 6.04% inflation, prices will double in roughly 11.9 years (72 ÷ 6.04% = 11.92 years).
Imagine what it would be like to pay twice as much for everything 12 years from now! Will your salary double as well?
Usually, high inflation rates also correspond to high interest rates as lenders need to compensate for the decline in purchasing power of future interest and principal repayments. This results in higher costs of doing business and place an overall drag on the economy.
The inflation rate plays an important role in determining the health of an economy. Countries with extremely high inflation rates are said to have hyperinflation and when this occurs the economy is often near collapse. See: Hyperinflation in Turkey and Argentina Today
U.S. Annual Inflation Rate in Percent
We calculate the Current Inflation rate (see table below) to two decimal places while the Bureau of Labor Statistics only calculates inflation to one decimal place. Therefore, while being based on the same government Consumer Price index (CPI-U) our data provides a "finer" view.
2022 is a perfect example, according to the government statistics March=8.5%, May=8.6%, and July=8.5%. However, our data shows inflation in March as 8.54%, May as 8.58%, July as 8.52%. Therefore we can see how close the inflation over this 3 month period really is.
In another example we see August 2003 and September with the Government saying inflation rates were 2.2% and 2.3% respectively. This would lead us to believe that inflation rose 0.1% during that period. In actuality however, it rose from 2.16% to 2.32% or a 0.16% increase, substantially more than 0.1%! Once again this finer view gives us a better picture that inflation might be rising more than it appeared to be.
For a more in depth commentary see Annual Inflation Rate Commentary
Current Annual Inflation Chart
The BLS Commissioner reported "The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in February on a seasonally adjusted basis, after increasing 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.0 percent before seasonal adjustment. The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing. The food index increased 0.4 percent over the month with the food at home index rising 0.3 percent. The energy index decreased 0.6 percent over the month as the natural gas and fuel oil indexes both declined."
On an annual (non-adjusted) basis inflation fell roughly 4/10ths of a percent from 6.41% to 6.04%.
The reason the Commissioner blames the rise on
shelter costs, is because they make up a fairly
significant portion of the total CPI making up 34.413%
of the total index. Of that roughly 4% is due to
household energy usage so had energy prices not declined
shelter costs would be even higher.
To see the entire percentage breakdown of the CPI go here.
Seasonally Adjusted Inflation Components Table
The Inflation table below is updated monthly and provides the current Annual US Inflation Rate (not seasonally adjusted) in the right-hand column and the other columns show various monthly components on a Seasonally Adjusted basis. The Inflation rate is calculated using the Current Consumer Price Index (CPI-U) published monthly by the Bureau of Labor Statistics. CPI Index Release Dates
Current Inflation Table
You may also be interested in a table of Monthly Inflation Rate data, which shows how much prices have increased over the previous month. Also check our current articles.Since high inflation is detrimental to the overall economy but beneficial to the government (since it allows them to pay back their debt with "cheaper dollars") the Federal Reserve has a constant balancing act to try to reconcile the government's desires for higher inflation with the need for a healthy economy.
In an effort to convince people that inflation is really good, the government has a constant media circus going promoting the benefits of inflation and decrying the evils of deflation--- but what's so bad about falling prices?
Their major argument revolves around the "stimulating" effects of inflation. Basically it makes people feel richer until they eventually realize that each of their dollars now buys less. But in the meantime they tend to spend the "excess". This results in people buying things they wouldn't have, had they realized that their money was actually worth less than they thought. Eventually this results in a monetary "hangover" as the effects of their buying binge become apparent.
Inflation is largely a result of increases in the money supply months or even years previously. Because of this serious lag in the time between the money creation and the time it shows up in the economy the FED must estimate the impact their money creation efforts will have years in advance. The Federal Reserve tries to target a 2% inflation rate but often over or underestimates the effect their actions will have.
The Federal Reserve monitors the inflation rate for its targeting purposes using the "Core Inflation Rate" which excludes food and energy leading some people to mistakenly believe that the U.S. government doesn't track those items in the inflation rate. Actually the Bureau of labor statistics does track them but the FED simply excludes them for targeting purposes because they are volatile and subject to external forces unrelated to the money supply.
We believe a picture is worth a thousand words, so we track the recent inflation rate in chart form to give you a better sense of the current direction of inflation and also the longer term inflation trends.
The inflation rate is calculated using the Consumer Price Index or CPI.
To calculate inflation from a month and year to a later month and year, Try our Inflation calculator.
We also post the previous Inflation Rates in our Historical Inflation Tables. The Historical Consumer Price Index is also available in table format. You can instantly see the current inflation trend in our chart of the Annual Inflation Rate.
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