Inflation: As of October 2022

INFLATION: The annual number reported each month is a combined string of 12 months of data, think of it as being 12 dominoes, a new one comes on, and the oldest one drops off. THESE are the 2 dominoes to look at to see if things got better or worse. In Oct ‘22 the month came in at 0.4%. If Nov ‘22 is 0.4% it will replace the Nov ‘21 data point of 0.8% on 12.13.22.

 

INFLATION: Energy prices have been THE major driver of inflation in 2022. Nov ’21’s 3.5% will drop off next month and it should help reduce overall inflation.

 

INFLATION: the 12-month CPI decreased from 8.2% to 7.7% for October 2022 as reported on 11.10.22. Energy prices increased slightly in October and for the year are up 18% and that is worldwide. Exclude energy, food, and Used Cars and inflation was 6.3%. The Federal Reserve sets interest rates based on the PCE which is 5.6%.

 

INFLATION’s major causes areG higher Energy and to a lesser extent Food. As a bar gets closer to the LEFT, it will fall off as new monthly data becomes available. The black hatched bar is the month that has recently fallen off and has been replaced by the most recent month’s data, that being Oct 2022. Higher interest rates will NOT solve these isolated sources of inflation.

 

GAS PRICES are an international item that affects all. Putin invades Ukraine 2.24.22 Gas prices were up 19% for the ONE month alone: March 2022.


The March 2022 spike will continue to be included in the annual CPI calculation for the

next 6 months. It is the gift that will keep on giving. For June gas prices are up 17% over May. Gas prices for the month of August were down 7%.

 

Oct 2021 data (red) was replaced by Oct 2022 (green). When red is larger than green, then inflation for that item will improve. When green is larger, then inflation is WORSE.

 

NEXT month will have new data for Nov 2022, therefore NOV 2021 data will drop off ON 12.13.22. Nov. 2021 is the RED bars. The green bar is the average of the prior 6 months (May 22 - Oct 22). When green is larger, then inflation is worse. For the Core component note, Used Cars will drop off.

 

The red bars are the MONTHLY average of Nov ‘21-Apr ‘22 while the green bars are the average of May ‘22-Oct ‘22. When green is larger, then inflation is worse. A monthly 0.4% is about a 5.0% annual rate.

 

As the impacts of COVID subside, the economy will come into focus. Below are the publication dates of the CPI, PPI, and Net New Jobs. These items will be key factors during the Federal Reserve’s meetings which are also listed below.


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