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 (blue bars). In Nov ‘22 the month came in at 0.1% and it replaced the Nov '21 0.8% on 12.13.22. A low bar replaced a tall bar, thus the total annual inflation decreased to 7.1%.
INFLATION: Energy prices have been THE major driver of inflation in 2022. Dec ’21’s 3.5% dropped off on 12.13.22 and this was a major contributor to the reduction of total inflation to 7.1%.
INFLATION: the 12-month CPI decreased from 7.7% to 7.1% for November 2022 as reported on 12.13.22. Energy prices decreased in November and for the year are up 13% and that is worldwide. Exclude energy, food, and Used Cars and inflation was 6.0%. The Federal Reserve sets interest rates based on the PCE which is 5.3%.
INFLATION’s major causes are: 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 The black hatched bar is the month that has recently fallen off and has been replaced by the most recent month’s data, that being Nov 2022.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 and will drop off on 4.12.23. The 17% June gas prices surge will fall off 7.12.23
Nov 2021 data (red) was replaced by Nov 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 Dec 2022, therefore DEC 2021 data will drop off ON 1.12.23. Dec 2021 is the RED bars. The green bar is the average of the prior 6 months (June ‘22—Nov '22). When green is larger, then inflation is worse. For the Core component, note NEW & USED Cars will drop off.
The red bars are the MONTHLY average of Dec ‘21-May ‘22 while the green bars are the average of June '22—Nov ‘22. When green is larger, then inflation is worse. A monthly 0.4% is about a 5.0% annual rate.
Below are the publication dates of the CPI, PPI, and Net New Jobs---data pertains to the prior month of economic activity. These items will be key factors during the Federal Reserve’s meetings which are also listed below.