Latest Inflation Numbers and Discussion

[Fermion]

Our insurance company hopefully will decide to reduce our rates if they see that they are making a little too much profit.

Brb, someone is selling a bridge for a steal.

 

[JoeWras]

Well, for what it's worth, I've received two insurance renewals this month, one for my home policy which went down about five percent, and one for my umbrella policy which is exactly the same amount as last year. So everything is not being inflated.

Your profile says "Flyover Country". There you go.

People want to live in earthquake country and near coasts and then complain when disasters happen and want someone else to pay for it.

Flyover country people should not pay for it. They suffer in silence continuously, away from the joys of beach and mountains. I don't say this sardonically, I'm serious. I lived there and enjoyed it, but missed the coasts.

I'm not on the coast, but I'm near (100 miles) to the coast, so I'm paying for it. That should be OK.

 

[finnski1]

R.E. state taxes . Last year $4800 this year $6000. 25% increase.

 

[38Chevy454]

Just got my car ins 6 month renewal. If I subtract out the extra vehicle I purchased last year, my premium stayed the same cost. No increase in auto policy. That was a nice surprise, although I still think it's higher cost than I would prefer. House is on different date schedule, so will see what happens there in future.

 

[Gumby]

CPI 12/31/23 = 306.746

Annualized inflation rates

Last 1 year > + 3.35%
Last 9 mos > + 2.17%
Last 6 mos > + 1.07%
Last 3 mos > - 1.36% (i.e. -- Deflation)

In fact, we have had deflation since last August, when the CPI was 307.026 (the 4 month annualized deflation rate is - 0.27%)

The numbers used in the above calculations are not seasonally adjusted.

Link to BLS release: https://www.bls.gov/news.release/cpi.nr0.htm

 

[audreyh1]

Wow!

Looks like they changed their CPI release format. They used to include a handy table that gave you the last 6 months statistics.

That plus graphs is included in the PDF version https://www.bls.gov/news.release/pdf/cpi.pdf

 

[JoeWras]

CPI 12/31/23 = 306.746

Annualized inflation rates

Last 1 year > + 3.35%
Last 9 mos > + 2.17%
Last 6 mos > + 1.07%
Last 3 mos > - 1.36% (i.e. -- Deflation)

In fact, we have had deflation since last August, when the CPI was 307.026 (the 4 month annualized deflation rate is - 0.27%)


Link to BLS release: https://www.bls.gov/news.release/cpi.nr0.htm

Unadjusted.

In general discussions, inflation is usually discussed using the seasonal adjustments.

I'm not arguing anything here. I am just pointing it out. Both numbers are important.

https://www.bls.gov/cpi/seasonal-adjustment/using-seasonally-adjusted-data.htm

How to Use Seasonally Adjusted and Unadjusted Data

For analyzing short-term price trends in the economy, seasonally adjusted changes are usually preferred since they eliminate the effect of changes that normally occur at the same time and in about the same magnitude every year—such as price movements resulting from changing climatic conditions, production cycles, model changeovers, holidays, and sales. This allows data users to focus on changes that are not typical for the time of year.

The unadjusted data are of primary interest to consumers concerned about the prices they actually pay. Unadjusted data are also used extensively for escalation purposes. Many collective bargaining contract agreements and pension plans, for example, tie compensation changes to the Consumer Price Index before adjustment for seasonal variation. BLS advises against the use of seasonally adjusted data in escalation agreements because seasonally adjusted series are revised annually.

 

[audreyh1]

I generally pay attention to unadjusted. Once they hit 12 months it’s all unadjusted anyway.

The CPI Release PDF includes a graph of unadjusted trailing 12 month CPI and core CPI. I find that the most useful of all. https://www.bls.gov/news.release/pdf/cpi.pdf

 

[Gumby]

Wow!

Looks like they changed their CPI release format. They used to include a handy table that gave you the last 6 months statistics.

That plus graphs is included in the PDF version https://www.bls.gov/news.release/pdf/cpi.pdf

Here is a quick summary of the topline CPI over the past 13 months (Dec 2022 through Dec 2023.

Dec 296.797
Jan 299.170
Feb 300.840
Mar 301.836
Apr 303.363
May 304.127
Jun 305.109
Jul 305.691
Aug 307.026
Sep 307.789
Oct 307.671
Nov 307.051
Dec 306.746

 

[JoeWras]

Sometimes it causes confusion if we don't point it which data set we comment on.

I know Gumby also likes to emphasize unadjusted because he gives out all those iBond and SS calculations. Makes sense.

 

[Marc]

CPI 12/31/23 = 306.746

Annualized inflation rates

Last 1 year > + 3.35%
Last 9 mos > + 2.17%
Last 6 mos > + 1.07%
Last 3 mos > - 1.36% (i.e. -- Deflation)

In fact, we have had deflation since last August, when the CPI was 307.026 (the 4 month annualized deflation rate is - 0.27%)


Link to BLS release: https://www.bls.gov/news.release/cpi.nr0.htm

You are using partial year for non-seasonally adjusted numbers; year over year you really don't need to worry about seasonal adjustments but partial years you do. Last three months last year had the same deflation yet we still have 3.4 year over year. Watch out for a jump in January.

I am hoping Fed decides to keep rates higher for longer; I can't argue with almost 2% real return on my cash.

Marc

 

[Gumby]

Unadjusted.

In general discussions, inflation is usually discussed using the seasonal adjustments.

I'm not arguing anything here. I am just pointing it out. Both numbers are important.

https://www.bls.gov/cpi/seasonal-adjustment/using-seasonally-adjusted-data.htm

Of course there are seasonal adjustments; I thought everyone knew that. But I am personally not going to attempt to make those adjustments in the three minutes between the release and what I report here. And it wouldn't matter if I did. There will always be those who want to carp that the BLS lies and things are not really getting better.

You are using partial year for non-seasonally adjusted numbers; year over year you really don't need to worry about seasonal adjustments but partial years you do. Last three months last year had the same deflation yet we still have 3.4 year over year. Watch out for a jump in January.

I am hoping Fed decides to keep rates higher for longer; I can't argue with almost 2% real return on my cash.

Marc

I KNOW THERE ARE SEASONAL ADJUSTMENTS. I am just reporting the numbers as quickly as I can and doing a little math in the process. If you want to pick nits so you can continue to claim things are not really getting better, I suppose I can't stop you.

 

[JoeWras]

Relax. Can you just add the word "unadjusted" when you publish numbers?

No, we don't all assume that since the media typically reports adjusted numbers.

 

[audreyh1]

I ignore adjusted because I don’t find month to month comparisons useful at all.

For IRMAA which months do they use to compare year over year?

I see Gumby already posted on the IBond thread which uses last six month unadjusted numbers October thru March and April thru September (inclusive) to set the 6 month inflation rate.

 

[Gumby]

....
For IRMAA which months do they use to compare year over year?
....

Here is the language of the statute --- Social Security Act, Sec. 1839. [42 U.S.C. 1395r]

(i)...

(5) Inflation adjustment.—

(A) In general.—Subject to subparagraph (C), in the case of any calendar year beginning after 2007 (other than 2018 and 2019), each dollar amount in paragraph (2) or (3) shall be increased by an amount equal to—

(i) such dollar amount, multiplied by

(ii) the percentage (if any) by which the average of the Consumer Price Index for all urban consumers (United States city average) for the 12-month period ending with August of the preceding calendar year exceeds such average for the 12-month period ending with August 2006 (or, in the case of a calendar year beginning with 2020, August 2018).

(B) Rounding.—If any dollar amount after being increased under subparagraph (A) or (C) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.

 

[Gumby]

Relax. Can you just add the word "unadjusted" when you publish numbers?

No, we don't all assume that since the media typically reports adjusted numbers.

I have edited my post to make clear that the numbers are not seasonally adjusted. My apologies, but I really am so tired of people constantly whining about inflation and insisting that things are not really getting better because they once, at some place or time unknown, bought gasoline at $2.37 per gallon. I'm beginning to question the motives of those doing so.

 

[audreyh1]

IRMAA: So since last August slightly negative.

 

[Gumby]

IRMAA: So since last August slightly negative.

I don't actually know if the IRMAA thresholds would be lower if we have continued deflation. Given the language of the statute, it is theoretically possible.

 

[audreyh1]

Yeah, been wondering about that.

But given the annual trends graph deflation over 12 months in total seems unlikely, but you never know!

I targeted the 0% inflation 2025 predicted levels with a little space. However that was for “surprises” such as extra income assigned due to foreign tax credit, and I don’t know that yet.

 

[Marc]

The finance buff's calculations show $210K limit MFJ for 2025 for both 0% and 3% inflation over period Jan - Aug 2024. Initial calculations for 2026 are $210K for 0% and $216K for 3% over period Jan 2024 through Aug 2025.

 

[Gumby]

Yeah, been wondering about that.

But given the annual trends graph deflation over 12 months in total seems unlikely, but you never know!

I targeted the 0% inflation 2025 predicted levels with a little space. However that was for “surprises” such as extra income assigned due to foreign tax credit, and I don’t know that yet.

I like this chart. If you set it to 3 years, you can see that the annual inflation rate has come down almost as quickly as it went up.

https://ycharts.com/indicators/us_inflation_rate

 

[audreyh1]

The finance buff's calculations show $210K limit MFJ for 2025 for both 0% and 3% inflation over period Jan - Aug 2024. Initial calculations for 2026 are $210K for 0% and $216K for 3% over period Jan 2024 through Aug 2025.

FinanceBuff hasn’t posted any 2026 IRMAA calculations yet, right?

 

[Marc]

FinanceBuff hasn’t posted any 2026 IRMAA calculations yet, right?

He did this morning.

 

[audreyh1]

He did this morning.

I’ve been looking for that post and haven’t found it yet.

I found this page but when I click on the first link it hasn’t been updated since Dec 12, 23 and doesn’t mention 2026 in the title.
https://thefinancebuff.com/category/healthcare

 

[Montecfo]

CPI 12/31/23 = 306.746

Annualized inflation rates

Last 1 year > + 3.35%
Last 9 mos > + 2.17%
Last 6 mos > + 1.07%
Last 3 mos > - 1.36% (i.e. -- Deflation)

In fact, we have had deflation since last August, when the CPI was 307.026 (the 4 month annualized deflation rate is - 0.27%)

The numbers used in the above calculations are not seasonally adjusted.

Link to BLS release: https://www.bls.gov/news.release/cpi.nr0.htm

Excellent info. Thanks Gumby!

It is very interesting. Are we really going to have 12 months of deflation? The PCE figures were showing a similar trend.

My guess is the Fed will cut quickly if this is the trend.

Goldman Sachs says first cut in March. I have been in the May camp. CME Fedwatch says March also.

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

The people waiting on a Fed rate cut to extend bond maturities are really getting clobbered. But the worst are the "awaiting higher rates" folks.