The monthly consumer price index (CPI) report for March received a little bit of attention when it was released because it showed an increase from February to March. The problem is that this is the same message that was given last month. last month it was reported that inflation was up month to month, too. Here is the thing: Both months were virtually identical to the same month from the year prior. This column published an article last month that showed that the "Chart 2" inflation for all items was actually down from February 2017. Inflation for all items minus energy and food was also down from February 2017. This month inflation for all items was 2.4% (or was it?) This is virtually identical to last March. This March the "ex-food-energy" was 2.1%, up a smidge from the 2.0% of March 2017. This is not the complete picture.
We are seeing Service and Shelter Inflation, Again. This is a broken record for the readers of this column. Energy was up 7.0% Medical Care Services were up 2.1%. Shelter inflation was 3.3%. Transportation services were up 4.3%. Hospital Services were up 4.9%.
Commodities are seeing deflation, again. Transportation commodities were down 0.5%. Household furnishings and supplies were down 1.5%. Education and Communications commodities were down 2.5%. Recreation commodities were down 2.9%
When you add it all together the total inflation rate is 2.14% not 2.4%. If you had 4000 dollars to spend last year it cost you $4002 to buy those goods and services last year. This year the same basket of goods cost you $4091. That is 2.14% more than last year, not 2.4%. Also, last year was closer to 2.8% than 2.4%.
How did we have seasonally adjusted deflation month to month and non-seasonally adjusted inflation year to year tick higher? Did we have higher inflation, annualized, this March or last March? If inflation was worse last March then this March this is good news. Which Is It? Why can the government exclude food and energy costs when we cannot do the same?
It's the economy.
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