CPI Running Mysteriously Low

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This morning the market got a recovery boost on lower Consumer Price Index "CPI" numbers that measure inflation.  The problem is that they are almost unbelievable.  Even CNBC commentators noted these may all be revised or have something not in the numbers.

The February CPI came out flat at 0.0% for the nominal CPI, and the core CPI on an ex-food and ex-energy basis came in flat at 0.0%.  On a year over year basis, those numbers are actually up 4.0% for nominal CPI and up 2.3% on the core CPI on an ex-food and ex-energy basis. On the monthly basis, we had estimates at +0.2% each.

When you break the numbers down for the monthly reading, they are claiming that energy prices fell by -0.5%, although it shows a monster year over gain of +18.9%.  The food costs showed a +0.4% gain, although that number was +4.5% year over year.  Maybe we are all just getting used to higher and higher prices to the point that it feels like they went up when they didn’t.

Maybe these numbers have errors, maybe they don’t.  We are not into conspiracy theories.  But to agree that inflation was flat is just too hard to stomach, and it isn’t as though the Labor Department calculations haven’t had major flaws before.  It just seems like Elaine Chao and her computers over at the Labor Department aren’t able to properly count again.

Jon C. Ogg
March 14, 2008