copyright1997reloaded
Thinks s/he gets paid by the post
ANother thing people get wrong is that they think 8% CPI is monthly. They think inflation was 8% up from last month. In reality it would be up zero percent over last month, if the CPI (annual) were 8% for June and also 8% for July. But 'zero percent' monthly inflation isn't a sexy headline, I guess.
Nope. This is not how it is calculated.
As an aside, if the latest inflation report (+1.3% MoM) is annualized, it would be over over 15.6%.
The fact that the YoY inflation rate went from 8.3% (April, as announced in May) to 8.6% (May, announced in June) to 9.1% (June, announced in July) means that the RATE of inflation (upward change in price over time) is ACCELERATING.
Next month (August) when we get the July report, we may see a decrease in the inflation rate (i.e. downward rate) because of the recent (in real terms) decline in gasoline prices. The pendants will all be celebrating that we are "past the peak", but the reality will be that prices will still be increasing (overall) at a rapid rate. Even if the inflation RATE dropped to ZERO, we still have the higher prices already accumulated over the last year or so.