Latest Inflation Numbers and Discussion

[GenXguy]

Here is an interesting site that "suggests" gas prices (with all their usual ups and downs) have remained reasonably stable at the equivalent of about $4.25 (my average - not theirs.)

I have no idea if this is correct, but I wouldn't doubt that the prices have been "stable" if you forget the wild fluctuations that we see over months or even years at a time.

https://www.usinflationcalculator.com/gasoline-prices-adjusted-for-inflation/

Based on your link, it says gas is up 63.8% since 2020, which isn't far off from what I calculated based on early Feb 2020 before COVID was affecting anything. We got hit pretty hard with inflation on most everything after that, including gas, all piling on.

The referenced article is cherry-picking data and then implying that the inflation war is over.

The Fed uses a 12-MONTH moving average of inflation data, NOT 2-MONTH.

I hope most here understand why the Fed uses a longer range of data than the 3 months referenced by the author of the linked article.

Some of the data are known to require long dead times from the time a rate is increased until the resultant data point reflects the impact of the move.

Agree. A month or so of inflation data isn't very meaningful. I'm interested in year over year, just as the Fed is following for their 2% Core PCE target. The last I read, it's still running at 200%+ of the target. Much work left to do to bring down inflation.

 

[11522914]

Inflation has cooled quickly this cycle. But the monthly figures tell an even more promising story.

From the article:

Annualized 6 month CPI trend
2.52%
Annualized 3 month CPI trend
1.89%

Core CPI?
O. 2% each of the past two months or 2.4% annualized.

Have we seen the last Fed hike of the cycle? Time will tell.

https://www.theweeklyjournal.com/bu...cle_b5a491c2-37c5-11ee-a2a9-33570d3bc5c8.html

Here's another view on the inflation front.

Core services inflation at 6.1% year-over-year; Core CPI at 4.7%. Three factors make it rough for CPI the rest of the year.

https://wolfstreet.com/2023/08/10/e...e-goods-prices-normalize-at-nosebleed-levels/

 

[Koolau]

Based on your link, it says gas is up 63.8% since 2020, which isn't far off from what I calculated based on early Feb 2020 before COVID was affecting anything. We got hit pretty hard with inflation on most everything after that, including gas.

Sounds about right. Of course, my personal inflation has been stunning. YMMV

 

[GenXguy]

Here's another view on the inflation front.

Core services inflation at 6.1% year-over-year; Core CPI at 4.7%. Three factors make it rough for CPI the rest of the year.

https://wolfstreet.com/2023/08/10/e...e-goods-prices-normalize-at-nosebleed-levels/

It's definitely concerning these continue to come in so high. They need to get these down as well as wage inflation, which feeds into everything else. Some people speak like wage inflation makes up for other inflation, but it actually just feeds the flame of inflation, so you end up with a wage / inflation spiral. Many of us are past earning wages and would rather not continue losing additional wealth to inflation. We realize what has already been lost is gone, but we still hope to stop the bleeding in the future.

 

[Koolau]

It's definitely concerning these continue to come in so high. They need to get these down as well as wage inflation, which feeds into everything else. Some people speak like wage inflation makes up for other inflation, but it actually just feeds the flame of inflation, so you end up with a wage / inflation spiral. Many of us are past earning wages and would rather not continue losing additional wealth to inflation. We realize what has already been lost is gone, but we still hope to stop the bleeding in the future.

Especially true if you're on a non-cola'd penison as I am. It's not that big to start with and it keeps getting "smaller" with every passing day. No way to increase it (Megacorp used to give increases "back in the day" but those days are gone.)

 

[Montecfo]

Here's another view on the inflation front.

Core services inflation at 6.1% year-over-year; Core CPI at 4.7%. Three factors make it rough for CPI the rest of the year.

https://wolfstreet.com/2023/08/10/e...e-goods-prices-normalize-at-nosebleed-levels/

Core CPI was 3.2% last 3 months annualized, 2.4% last two months annualized.

I'm glad we are no longer as concerned about CPI and have now graduated to fretting about super-core CPI. All measures are heading down and have declined quickly by historical measures. But that does not mean inflation is over. It just means the Fed measures are working and we are near the end of Fed hikes absent some new input.

As an aside I have read Wolf Street but the tone seems a hyperbolic for my taste.

 

[JoeWras]

It's definitely concerning these continue to come in so high. They need to get these down as well as wage inflation, which feeds into everything else. Some people speak like wage inflation makes up for other inflation, but it actually just feeds the flame of inflation, so you end up with a wage / inflation spiral. Many of us are past earning wages and would rather not continue losing additional wealth to inflation. We realize what has already been lost is gone, but we still hope to stop the bleeding in the future.

Hello late 70s, early 80s.

The other thing that happened during that time was a lot of labor strife that resulted in rising wages.

Uh, we have a thread here about the new UPS driver contract. Just sayin'

 

[11522914]

Core CPI was 3.2% last 3 months annualized, 2.4% last two months annualized.

I'm glad we are no longer as concerned about CPI and have now graduated to fretting about super-core CPI. All measures are heading down and have declined quickly by historical measures. But that does not mean inflation is over. It just means the Fed measures are working and we are near the end of Fed hikes absent some new input.

As an aside I have read Wolf Street but the tone seems a hyperbolic for my taste.

I agree the drop in inflation looks good right now.

My concern going forward is the base effect along with the health care reporting issue. "If" health care gets increased significantly in September, as it has many times in the past, this - along with the base effect might result in some inflation pressure.

I certainly hope you're right and I'm wrong.

What I like about Wolf Street is he presents the facts in an understandable format with great charts that allows me to form my own opinion.

 

[audreyh1]

I guess if you want to pick the period in 2020 where oil briefly plummeted to $20 per barrel due to worldwide shutdown and only compare from there……

Since 2007 there have been periods of higher and lower oil prices compared to today.

 

[GenXguy]

I guess if you want to pick the period in 2020 where oil briefly plummeted to $20 per barrel due to worldwide shutdown and only compare from there……

No need to cherry pick and select a date after the COVID shutdowns. You can go back to Feb 3, 2020, which was over a month before any COVID related restrictions in the U.S., and the national average gas price was $2.455/gallon. Oil prices were still closer to $60 per barrel at that point. This gets you back before all of these events that really made inflation take off, which is the point. I'm calculating gas is 63% higher today where I live than that figure.

 

[Montecfo]

I agree the drop in inflation looks good right now.

My concern going forward is the base effect along with the health care reporting issue. "If" health care gets increased significantly in September, as it has many times in the past, this - along with the base effect might result in some inflation pressure.

I certainly hope you're right and I'm wrong.

What I like about Wolf Street is he presents the facts in an understandable format with great charts that allows me to form my own opinion.

I agree with your points.

And it is not a right or wrong thing with me, it is just data. They say what they say.

But micro picture aside the macro trend in inflation has been steadily and quickly (by historical standards) lower.

Will this continue? I expect so unless some new input derails it. But impossible to know of course.

 

[eytonxav]

Have they? There is a shopette on the corner that used to pump gas. I moved here in 2012. That shop stopped pumping gas sometime prior to my arrival. The price on the sign is $3.60 for 87. The price at the nearest station that is still pumping gas today is $3.43 for 87. Sometime prior to 2012 we were paying $3.60/gal or more. My assumption: I was paying more than $3.60/gal 11 years ago. Gas is cheaper (for me) today then it was 11 years ago. My income has increased. Hence, gasoline disinflation.

I am just looking at my local station and it's gone up quite a bit recently. This all depends how you want to pick timeframes. What were you paying back in 2020 when the US fossil fuel industry was considered a valuable resource and output/investment was not yet throttled by gummit?

 

[pb4uski]

^^^ You are correct. The price of gas today is about the same as 2012-2014... not sure how that is with inflation as rampant as some people claim.

 

[Fermion]

Does the carbon tax of Washington state on gas count as inflation? I say yes, since it adds to the end cost. Our gasoline in that case is at a all time record high.

 

[Koolau]

^^^ You are correct. The price of gas today is abot the same as 2012-2014... not sure how that is with inflation as rampant as some people claim.

If prices go up - that's inflation. Period. The fact that we had deflation in the O&G bidness from about 2012 on has to do with the way gummint was treating the bidness (just before then.) Recently, gummint hasn't been so kind to O&G. Thus, prices have gone BACK up. That's inflation. The "cause" is not the issue. Inflation is the issue.

 

[Aerides]

I guess if you want to pick the period in 2020 where oil briefly plummeted to $20 per barrel due to worldwide shutdown and only compare from there……

Since 2007 there have been periods of higher and lower oil prices compared to today.

In 2020, gas was low, about $2.28 for the year overall average. Sure, even February, $2.53. But in 2011-14 it averaged $3.50, and was $2.83 for 2018.

2022 it was high, $4.05. We're a bit below that so far for 2023. But gas as a marker of inflation is wobbly and unhelpful as it is not remotely linear.

And I'm sure we all remember 2008. Gas today is cheaper than it was 15 years ago, lol.....

 

[Mulligan]

The Producer Price Index was hot this week. But the good news is the hottest number from the services sector, most here dont have to worry about….

A 7.6% surge in portfolio management fees accounted for 40% of the rise in services.

 

[GenXguy]

If prices go up - that's inflation. Period. The fact that we had deflation in the O&G bidness from about 2012 on has to do with the way gummint was treating the bidness (just before then.) Recently, gummint hasn't been so kind to O&G. Thus, prices have gone BACK up. That's inflation. The "cause" is not the issue. Inflation is the issue.

It certainly is. And since the pandemic is what really changed the world and set all of this high inflation in motion in recent years, it only makes sense to me to compare what the price of gas was JUST BEFORE the pandemic restrictions to what it is now to see what its contribution was to all of that inflation. So that's what I looked up and calculated I'm paying 63% more for a gallon of gas today than before the pandemic lockdowns ever started in this country. I'm not interested in going back about 10 more years to cherry-pick what gas might have been at some previous spike because I'm concentrating on what's happened to prices since the pandemic started up to now, where all the pain came about for myself and so many others. Hope we finally get inflation under control, but I expect most prices to continue to climb ongoing, as that is what inflation is with any positive number. We're stuck with high prices now in general, but I hope we can keep up with our investment gains after taxes at some point.

 

[pb4uski]

If prices go up - that's inflation. Period. The fact that we had deflation in the O&G bidness from about 2012 on has to do with the way gummint was treating the bidness (just before then.) Recently, gummint hasn't been so kind to O&G. Thus, prices have gone BACK up. That's inflation. The "cause" is not the issue. Inflation is the issue.

Did you fail spelling?

If you look at the trend from 1994 to 2001 then despite significant volatility along the way, the price of gas today isn't particularly unusually high.

 

[eytonxav]

^^^ You are correct. The price of gas today is about the same as 2012-2014... not sure how that is with inflation as rampant as some people claim.

We enjoyed cheap energy for several years when gov't regs were cut and more drilling/output was encouraged in the US, but without being political, when did we see a change to that situation? I certainly believe the gov't policy towards the US fossil fuel industry is hurting our economy and will likely continue to do so given a return to dependency on other global supply sources.

 

[JoeWras]

Looks like this thread is headed to the danger zone. I do not want to smell bacon today. The price is too high.

 

[Montecfo]

Yes good point.

I want to have a place to talk about the numbers when they come out.

 

[pb4uski]

We enjoyed cheap energy for several years when gov't regs were cut and more drilling/output was encouraged in the US, but without being political, when did we see a change to that situation? I certainly believe the gov't policy towards the US fossil fuel industry is hurting our economy and will likely continue to do so given a return to dependency on other global supply sources.

I'm not trying to analyze why... just observing the data. With respect to your thoughts that "gov't policy towards the US fossil fuel industry is hurting our economy", WADR the economy seems to be doing just fine and at this juncture taming inflation (the topic of this thread) is a higher priority since economic growth is still good.

 

[GenXguy]

I'm paying $4/gal for regular gas now. On Feb 3, 2020, before the lockdowns, the national average for regular gas was $2.455. But that is all I have to say.

No need to cherry pick and select a date after the COVID shutdowns. You can go back to Feb 3, 2020, which was over a month before any COVID related restrictions in the U.S., and the national average gas price was $2.455/gallon. Oil prices were still closer to $60 per barrel at that point. This gets you back before all of these events that really made inflation take off, which is the point. I'm calculating gas is 63% higher today where I live than that figure.

I just saw the state average was up to $4.14/gal now. So that's actually almost a 69% increase over the previous pre-pandemic figure above, worse than my earlier figure. I'm cutting back on driving more. Yes, I'm sure some of you have cheaper gas in your area, but that doesn't help with my personal inflation. The Fed needs to do more, and the economy and wage spiral are still too hot.

 

[MichaelB]

The price of gasoline is volatile and many differing conclusions can be drawn depending on what period is being measured. This volatility is the reason it is excluded from “core inflation” measures.

Here’s a chart of the average price since before the GFC of ‘08

.