Friday, March 14, 2008
A short time ago, the Bureau of Labor Statistics reported that, after doing yeoman's work since last fall, "inflation" took the month of February off as consumer prices registered no change from January.
On a year-over-year basis, consumer prices have reportedly risen 4.0 percent.
That just doesn't sound right, does it? Four percent? From last February?
Since last September, after the credit crunch hit and interest rates started dropping like a rock (along with hedge funds, mortgage lenders, and consumer confidence), the following monthly changes have been registered by the Consumer Price Index:
Adding in the goose egg for February yields a six-month annualized rate of 4.8 percent.
Again, that just doesn't feel like it describes what is really happening out there. Gasoline now costs $4 in Hawaii and you have to be very careful when shopping for food lest you wind up with an $8 block of cheese in your cart.
Health care isn't getting any cheaper yet the consumer price index puts the annual increases for both food and medical care at just 4.5 percent.
Where does the BLS shop and who are their doctors?
The BLS data shows increases of 33 percent for both gasoline and heating oil from one year ago - now that sounds about right.
But, prices continue to fall for apparel, household furnishings, and new cars while that owners' equivalent rent sits there like the Rock of Gibralter, contributing almost a quarter to the overall consumer price index with an increase of just 2.6 percent from one year ago.
No matter how fast and how high consumer prices actually rise, we'll probably never have much "inflation".