By TIPPINSIGHTS EDITORIAL BOARD, TIPP Insights
The media is waiting for inflation to peak and taper down to pepper the news stream and gaslight the American public that inflation is no longer a problem to boost Democrats’ chances in November 2022.
Many people trust media reports prima facie rather than worry about deciphering the math behind the numbers. The Consumer Price Index (CPI), the popular measure of inflation reported, is a year-over-year measure. For example, the July CPI measures the price increase during the twelve months from June 2021 to June 2022.
Significant inflation had already set in by the middle of last year. In June 2021, CPI inflation was 5.4 percent. In the coming months, the official CPI will compare future month prices to already inflated bases. The year-over-year calculation may moderate the statistics, but you will still feel the pinch of inflation. Watch our words: the media will shift gears to portray slowing inflation.
So, how do you counter media browbeating?
Here are two ways.
First, we have developed the TIPP CPI, a metric that uses February 2021, the month after President Biden was inaugurated, as its base. All TIPP CPI measures are anchored to the base month of February 2021. January 2021 was a mixed month under the watch of two presidents, two-thirds by President Trump and one-third by President Biden, so we chose to ignore it, making the TIPP CPI exclusive to the economy under President Biden’s watch. Please note that we use the relevant BLS data but recalibrate it to arrive at the TIPP CPI.
Second, to understand the direction of inflation, take an average of the month-over-month CPI readings over the past three months. If things improve, the current month’s reading should be lower than the three-month average.
TIPP CPI vs. BLS CPI
To access the TIPP CPI readings each month, you can visit tippinsights.com. In the future, we’ll publish the TIPP CPI and our analysis on the day following the Bureau of Labor Statistics (BLS) report. The upcoming releases of TIPP CPI are August 11, September 14, October 14, November 11, and December 14. We’ll also post a spreadsheet in our store for free download.
The following three charts present more details of the new metric.
The official CPI reported by BLS is 9.1% for June 2022. Compare this to the TIPP CPI of 12.7%, a 3.6-point difference. Prices have increased by 12.7% since President Biden took office.
Gasoline prices have been up by 94% since President Biden took office. However, the BLS CPI for gasoline is 59.9%, a difference of 34.1 points.
Used car prices have risen by 41.8% since President Biden took office. The BLS CPI does not capture the pain and posts a relatively moderate 7.1%, a difference of 34.7 points.
Inflation for air tickets under President Biden is 74.5% compared to a BLS CPI of 34.1%.
The Direction Of Inflation
When the media hijacks the discussion, the TIPP charts allow you to determine the truth using the month-to-month change. The chart below compares the 12-month average, the 6-month average, the 3-month average, and the reading for June. The 12-month average represents 12-monthly readings. It is slow to change and represents stability.
The three-month average is relatively faster and considers the recent past, the last three months.
The monthly reading for June 2022 for all items spiked by 1.3% compared to 0.87% for the three-month average. Things worsened.
The food data has been relatively stable, posting a point rise each month.
Energy spiked 7.5% in June compared to the three-month average of 2.90%. Gasoline prices averaged over $5 a gallon in most markets, a fact well repeated by the corporate media.
This article is the second in our multi-part series on the economy. Did you read our article on how Americans cope with food costs due to increased prices? The shocking story is a must-read that quantifies Americans’ food challenges. You won’t hear it in the mainstream media or from the White House, which is touting an excellent economy reminiscent of the optimism of Baghdad Bob.
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