Monday, May 18, 2009

CPI: TheTransportation Story

In response to last week's post on CPI, an anonymous reader asked:

Can you annualise the month over month CPI data? When you put the month over month data along with the year over year data, I can hardly distinguish which is which.
My response:
That's kind of the point. these changes ARE tiny (but the media makes it out to be of huge importance). The much more important figures are the year over year changes because they show the actual trend; which has generally been deflationary.
Breaking out the trend in year over year terms, we see the dominant "driver"... transportation (how's that for a play on words?). While I've been remarking that transportation was the main reason for last years spike (and this years fall) in inflation before, I am quite surprised at the relative stability for all the other categories.

Contribution to CPI

By Category (Rolling Year over Year Change)

Source: BLS

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