US consumer prices tick up just 0.1 percent last month despite big gain in energy costs

Associated Press ^ | 20 Feb 14 | CHRISTOPHER S. RUGABER

[xzins]

U.S. consumer prices barely rose last month as a sharp increase in energy costs was offset by cheaper clothing, cars and air fares. The figures indicate inflation remains mild.

The Labor Department said Thursday that the consumer price index rose just 0.1 percent in January, down from a 0.2 percent gain in December. Prices have risen 1.6 percent in the past 12 months. Excluding the volatile food and energy categories, core prices also rose just 0.1 percent last month and 1.6 percent in the past year.

The year-over-year increase in core prices was the smallest in seven months.

The "mild uptick ... confirms the fact that inflationary pressures remain well contained," Martin Schwerdtfeger, an economist at TD Bank, said in a note to clients.

[1rudeboy]

Just trying to explain that shrinking package sizes are taken into account. If that goes over your head, not my problem.

[khelus]

Once you start exploring the concepts behind so many ‘enhancements’ to the CPI it’s mind boggling. Junk concepts are cleverly hidden by convoluted language and mathematical formulas intend to deter anyone interested in looking behind the curtain.

All those ‘guality improvements’ are in the mind of ivory tower academics and government bureaucrats.

Note an added bonus of under reporting inflation is that ‘real’ GDP, i.e. GDP adjusted for inflation by the CPI is made to look larger than it is.

[xzins]

The GDP is the recession measure isn’t it? Am I remembering that right. 2 quarters of negative GDP growth. (or is it 2 of zero growth or less?)

If they’re making it larger, then we’ve had more recession than being admitted to.

[khelus]

I forgot to add, that if my old TV dies, and the closer new equivalent costs $1350, and my set standard of living includes a TV, then I spent $1350 and that is what ought to be counted in the CPI. period !

[xzins]

I don’t know how they determine what goes in their basket, but with large ticket items like tvs and autos, they probably shouldn’t pick the least expensive or the most expensive. Perhaps they should average every tv in the entire sector, but the truth is that if I spend $1350, please don’t tell me it was actually $1250 that I just spent. That’s just crazy.

[RipSawyer]

The official gooberment figures say that $9.71 equals $1.00 in the year 1950 in buying power. I say that anyone who believes that is either too young to have any knowledge based on experience or is too gullible to be allowed to leave the house unescorted.

I entered first grade in 1950. Lunch at school cost five pennies then, gasoline was about twenty cents a gallon. A 1950 Ford “Fordor” sedan cost $1472. No, that is not a typo, you can look it up. There were fifty acre farms with houses being sold for five thousand dollars. It was several years later than that when my parents turned down the chance to buy the house in which my mother had been born along with a lot of barns and outbuildings and 54 acres for $6000. because “the price was mighty high”. There were houses that could be rented here for twenty dollars a month or even less. A new Ford 8n farm tractor sold for less than it will fetch on the used market 64 years later. I can recall married men saying that they were making one dollar an hour so they were doing OK. The gooberment figures are ridiculously, absurdly, amazingly low and based on nothing more than feel good adjustments designed to keep social security down. They tell you that social security was never meant to be enough to support someone without other income but there definitely was a time when it was possible to live well enough in this part of the country with just a social security check. I knew plenty of people who used to do just that. In fact a lot of families got by for a whole year on what my current monthly social security is. If you owned a home mortgage free and had no other debts you could do as well or better than most working people can do today other than not having cable TV with nothing worth watching or not being able to text on a cell phone. On the other hand you could buy a new handgun from Sears and it would be delivered to your mailbox. If you stood by the road in a military uniform and held up a sign saying “Praise Jesus” someone would stop and thank you for the privilege of giving you a ride rather than spitting on you.

[1rudeboy]

Posted for information only:

Chalk it up to Republican obstinacy, Democratic opposition, or just plain common sense, the White House has dropped the noxious chained CPI from its Social Security proposals for the upcoming federal budget.

The chained consumer price index is a new way of calculating inflation that backers say is more "accurate" than the traditional CPI. As we demonstrated conclusively last year, it's not more "accurate."

But those who advocated using the chained CPI to calculate annual Social Security cost-of-living raises didn't really care about its accuracy. For them, its salient quality was that it produced a lower inflation calculation, by an average of about 1% a year. 

As we've pointed out in the past, the difference is cumulative. The result is a stealth benefit cut for recipients that grows over time. It might look modest at first, but after 10 years of retirement, recipients would be receiving 10% less in their monthly checks than they would have received under the traditional CPI. After 20 years--that is, for retirees in their mid-80s--the difference is minus-20%.

[]

Bye-bye, chained CPI. Michael Hiltzik, Los Angeles Times, February 21, 2014.

[khelus]

The GDP is the recession measure isn’t it? Am I remembering that right. 2 quarters of negative GDP growth. (or is it 2 of zero growth or less?)

If they’re making it larger, then we’ve had more recession than being admitted to.

The GDP = Gross Domestic Product. It is used to measure economic growth or decline.

There has been a change in how a recession is defined. It is no longer two months of negative GDP or growth. Here's the new deal:

Per the BEA:

In general usage, the word recession connotes a marked slippage in economic activity. While gross domestic product (GDP) is the broadest measure of economic activity, the often-cited identification of a recession with two consecutive quarters of negative GDP growth is not an official designation. The designation of a recession is the province of a committee of experts at the National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy. The NBER recession is a monthly concept that takes account of a number of monthly indicators—such as employment, personal income, and industrial production—as well as quarterly GDP growth. Therefore, while negative GDP growth and recessions closely track each other, the consideration by the NBER of the monthly indicators, especially employment, means that the identification of a recession with two consecutive quarters of negative GDP growth does not always hold. For information on recession, or business-cycle, dating, see: http://www.nber.org/cycles/jan08bcdc_memo.html. - See more at: http://www.bea.gov/faq/index.cfm?faq_id=485#sthash.cD4PtdJW.dpuf

NBER List of Cycles

The last recession in theory ended in June 2009. That is based upon using jimmied stats.

The following chart shows real GDP calculated using the CPI which represents a declining standard of living in red.

The line in blue represents real GDP calculated using an index of inflation that represents a set standard of living, in other words the CPI stripped of the inflation suppressing enhancements added since the mid 1980's.



If you have any questions or my answer is confusing, feel free to ask. I'll do my best to make my answers clear.

[Toddsterpatriot]

It does prove my point. The Fed uses core inflation measures that excludes volatile items.

The Fed looks at Core CPI (as well as a bunch of other things), I've never, ever, ever denied that.

I seemed to remember hearing that Greenspan liked looking at PCE, not sure if I read that Bernanke liked it or not.

You claimed that PCE excluded volatile items. Your link didn't prove that claim.

[Toddsterpatriot]

Is one of the arguments on this thread that the C-CPI-U understates the CPI-U?

Yes, because food inflation is XX% (XX=a ridiculous number, far from reality).

the C-CPI-U came-in higher* than the CPI-U over the past 12 months?

Must be a conspiracy, that could never happen for real./John Williams off

Can the two even be compared

Probably, the world won't end if you do (or don't).

[Toddsterpatriot]

I'm not defending their use of hedonics for gasoline, or much of anything else, but I think, for gas, they have a point.

The government mandated adding MTBE to gas. That raised the price. You can't blame that rise on inflation. That was due to government idiocy.

Maybe they need a government idiocy index, to show how much of our daily expenses are due to stupid regs and taxes?

[Toddsterpatriot]

If you can divide, he claims you’re defending the status quo.

[Foundahardheadedwoman]

I figure eating for one is cheaper at fast food joints by the time I buy the meat, bread by the loaf that I never use before it goes bad, the veggies, it is cheaper then buying this stuff and making it myself. If I have coupons it is way cheaper.

Does anyone have any good recipes for roadkill?

I used to eat well, high protein, low fat, low carbs, but eating well has become expensive. I have to save for ammo. My co pay on my medicare also leaped this year, went from roughly 40 bucks to 98 bucks. To all the folks that voted for Obozo, may you freeze to death in the dark. As Patton said, May God have mercy on you, I won’t.

[stockpirate]

Food and fuel prices are NOT included in the inflation calculations.

Also food price increases are being hidden from consumers, one way is they decrease the amount you get while keeping the price the same, ie a 36 oz box of Wheat Chex for $3.99 is now a 26 oz box for $3.99...

[xzins]

Gasoline costs me what gasoline costs me, Todd. It’s only utility for me is being in my tank and making my car go. No matter what they add its utility doesn’t change, it is the only item that works for what it does in my engine, and telling me that their additives actually mean my price has gone down when the price at the pump is UP is nothing more than irrational IF THEY are trying truly to find if MY COSTS have gone up.

If you tell me that “angus” sirloin costs 50 cents a pound more than non-angus sirloin, and I choose the angus, then fine, tell me I’ve not really had a price increase because I chose a more expensive product when the same thing was available cheaper.

But...gasoline? What else will I put in my tank...water?

[old and tired]

The problem is that most of that top 20% are being hit as hard, if not harder than everyone else. These are the people who get no tax breaks, no government subsidies, no handouts. Virtually everyone I know here in suburban Philadelphia is in the top 20% of income in this country. However, they're struggling.

At first, it may have been switching to cheaper food, when the old car died it was replaced by a much cheaper one. But now, the credit lines have all been run up on maintaining a middle class lifestyle. Not vacations and such, but kids' sports fees and equipment, maybe math tutoring, braces, etc. So many of these supposedly rich folks are hanging on by a thread. And next time their car dies, it's not going to be replaced by a cheap little (but new) Ford Focus, it's going to be replaced by a beater.

[xzins]

I tend to agree with you about dining out versus purchasing and cooking my own meals. When time, clean-up, etc. get factored in, it probably makes sense for one or two people to go through the drive through rather than cook too much at home. (I really don’t enjoy sitting in restaurants all that much.)

For a family with kids, eating at home is the only way to go price-wise, and then there’s the necessity of teaching them around the family table how to be human.

Soup, Chili, Stew and the like would be the exceptions.

[old and tired]

It doesn’t matter how the government calculates food inflation because food is not part of the core inflation that the government is reporting.

[xzins]

I think we’re beating a weary horse over the PCE and core inflation. Can we agree that the Fed doesn’t EXCLUSIVELY use only measures that include food and fuel?

[1rudeboy]

Please see comments 95 and 101.