Friday, March 14, 2008

Don't Be Fooled By Seemingly Low Inflation Number

Today's U.S. CPI number came in a lot lower than expected, with both the core and the all-items index being unchanged on a monthly basis. However, people should not from conclude is really low, as there were two special factors temporarily depressing the number. First of all, some of this is reflect problems with seasonal adjustment. The actual all-items and core number both in fact rose 0.3%. Moreover, the repott says that energy prices fell. But this reflects the temporarily depressed oil price in early February, which then stood at around $90 per barrel. Now oil is trading at over $110 per barrel, making this report very out of date. So the seeming lull in inflation will certainly only be temporary.


Blogger Independent Accountant said...

If you follow the US economics blogosphere, no one here is fooled by the CPI numbers.

2:49 AM  

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