$1 in March 2023
is the same buying power as 1.03 in March 2024

That is 3 percent.

https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=202303&year2=202403

($10,000 is even better, but in the below I used $100)

https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100&year1=202303&year2=202403

Result: $103.48 which is a 3.48% increase which matches the below:

CPI: https://data.bls.gov/timeseries/CUSR0000SA0

Click on "MORE FORMATTING OPTIONS" and click the following checkboxes: "original data value", "3 month percent change", and "12 month percent change" checkboxes, and then click the Retrieve Data button.

On the 12 month one it shows 3.5% for March 2024 which is 3.48% rounded.

Using the original data values
The 12 months Mar'23-Mar'24 is 312.230/301.744 = 1.03475 -> 3.475% -> 3.48% -> 3.5%

Graphs of all the inflation measures through March (month by month and rolling 3 month averages)
https://www.democraticunderground.com/10143231474#post1

Edited to add: On my graphs the numbers are all annualized (for easy comparisons to each other and to the 2% Fed target), so that has to be taken into account when comparing to CUSR0000SA0 or the inflation calculator, neither of which annualizes.

And I noted that annual inflation was 3.3% for the entire year in 2023. That does not change the fact that inflation has been unusually high the past 3 months, and if it continues at that pace it would be exceptionally high for the year. Something needs to happen, and soon.

The chart at this New York Fed link looks at PCE and also attemtps to reduce statistical noise.

https://www.newyorkfed.org/research/policy/mct#--:mct-inflation:trend-inflation

screenshot of December to March here https://1drv.ms/i/s!AuZvhwK6zdfIi0APz4AapPr1jbkz?e=yg3fjl


CPI vs PCE
There are two common measures of inflation in the US today: the Consumer Price Index (CPI) released by the Bureau of Labor Statistics and the Personal Consumption Expenditures price index (PCE) issued by the Bureau of Economic Analysis. The CPI probably gets more press, in that it is used to adjust social security payments and is also the reference rate for some financial contracts, such as Treasury Inflation Protected Securities (TIPS) and inflation swaps. The Federal Reserve, however, states its goal for inflation in terms of the PCE.

The two measures, though following broadly similar trends, are certainly not identical. In general, the CPI tends to report somewhat higher inflation. Since 2000, prices as measured by the CPI have risen by 39 percent, while those measured by the PCE have risen by 31 percent, leading to differing average annual inflation rates of 2.4 and 1.9 percent. In this century, then, CPI inflation has run about half a percentage point higher than PCE inflation. When calculated from 1960 the difference is almost the same, 3.9 percent for the CPI and 3.4 percent for the PCE. Since 2008, however, the difference has been smaller, 1.7 percent and 1.4 percent.

But, since I’m comparing apples to apples (historical CPI average vs recent CPI) I don’t see that it makes much difference. Essentially what I was noting is that we have a similar first quarter increase happening again, and I’m expressing the hope that this will end up like 2023. If it doesn’t and it remains high, we’re in trouble.

Last edited Mon May 13, 2024, 06:05 AM - Edit history (1)

The PCE also shows a strong elevation over the last 3 months.

The rolling year-over-year graph of the PCE (and CPI) look very nice, but they pretty much bury the surge of the last 3 months in 9 months of older mostly lower numbers.

In a 12 months rolling average, any month's increase is watered down by a factor of 1/12, so even if the latest month-over-month number is large, the change in the 12-month average looks like a little bump up -- and people just say, oh it’s a little bump up due to seasonal factors (the numbers are seasonally adjusted by the way).

Even a large 3 month increase gets watered down by a factor of 1/4 in a 12-month rolling average.

I'm not the only one that looks at shorter periods like 3 and 6 months to get a better read on CURRENT or RECENT inflation:

https://finance.yahoo.com/news/new-inflation-reading-reinforces-feds-higher-for-longer-stance-144840988.html

(emphasis added)

Regular PCE through March that came out 4/26/24
PCE: https://fred.stlouisfed.org/series/PCEPI


The FRED graph at https://fred.stlouisfed.org/series/PCEPI by default shows the index numbers, and that's what I use to do my calculations. Here are the 4 most recent PCE index numbers:

Dec 2023: 121.448
Jan 2024: 121.962
Feb 2024: 122.374
Mar 2024: 122.769

(One can get the values from mousing over the graph, or from clicking the " (+ more) " link at the "Observation: Mar 2024: 122.769" just above the graph at the far left side.

The latest 3 month increase is 1.0877% (122.769/121.448 = 1.0108771 => 1.0877%)

Annualized, the 3 month increase is: 1.0108771^4 = 1.044223 => 4.42%

One can also show other displays of the FRED graph:

Click "Edit Graph" and choose, under "Units" "Percent Change from a Year Ago" and it looks paradaisical, pure utopia, thanks to this rolling 12 months display's ability to bury recent high numbers with 9 older months of mostly lower numbers.

But select "Percent change" which is month-to-month change, and its quite an upturn: (I set the time period from 2022-09-01 to 2024-03-01 to focus on the last 1 1/2 years)

Reading from the graph (data values pop up under the mouse):

Dec'23: 0.12531%, Jan'24: 0.42323%, Feb: 0.33781%, Mar: 0.32278%

The last 3 sum to 1.08382% or simple average of 0.36127%

Annualizing the 3 month sum produces a 4.41% increase (1.0108382^4 = 1.04406 => 4.41%)

Here is the Fed graph with the above settings (Percent change and time period 2022-09-01 to 2024-03-01) :

IMGUR:

Less accurately: Clicking on the " (+ more) " under the " Observation: Mar 2024: 0.3) " at the top left above the graph yields their rounded data points:

Dec'23: 0.1%, Jan'24: 0.4%, Feb: 0.3%, Mar: 0.3%.

Adding up the last 3 months is 0.4% + 0.3% + 0.3% = 1.0% which annualizes to 4.0% by simply multiplying by 4. Or to 4.07% using proper math ( 1.004 * 1.003 * 1.003 = 1.01003, 1.01003^4 = 1.040740 => 4.07%)

Here are the latest annualized numbers from the PCE and CPI, both the regular and the core variety:

The "1 month" number is the change from February to March, expressed as an annualized number.

"Regular" is the "headline" number that has "everything"

"Core" is the regular with food and energy removed (The Fed prefers this as a basis for projecting FUTURE inflation)

4/26/24 PCE (Fed's favorite inflation measure)

REGULAR 3 month: 4.4%, REGULAR 1 month: 3.9%; CORE 3 month: 4.4%, Core 1 month: 3.9%;

4/10/24 CPI-Consumer(retail) inflation

REGULAR 3 month: 4.6%, REGULAR 1 month: 4.6%; CORE 3 month: 4.5%, Core 1 month: 4.4%;

All four 3 month averages increase at or above 4.4% (annualized), more than double the Fed's target 2%.

All of the inflation graphs are at: https://www.democraticunderground.com/10143231474#post1

Edited to Add (7am EST 5/13):

Johnny2x2X often reminds us that wages are at least keeping up:

Average real (i.e. inflation-adjusted) hourly earnings are up over the past 2 years and are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013

The other thing is that I expect the 3 month rolling average increases of the core PCE and the regular PCE to turn down if the April month-over-month numbers come in the same as the March ones (+0.3% month-over-month for both the core PCE and regular PCE). That's because the very high January number drops out of the 3 month window. The April numbers for the PCE come out in late May.

Before that, we see the new CPI numbers this Wednesday May 15. I expect the same thing: a little turndown of the rolling 3 month average increases.

Thats what a Trump vote would be - an attempt to `punish` Biden by giving the presidency back to the Lunatic. It would only make things worse. I think people get that.

Thanks for the concern though.

Last edited Sun May 12, 2024, 10:06 AM - Edit history (1)

For the 3 month period Dec'23 to Mar'24 (and using $10,000 for more accuracy to compare to CUSR0000SA0 )
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=10000.00&year1=202312&year2=202403

Result: $10,182.11 which is a 1.8211% increase which DOESN'T MATCH THE BELOW and I don't know why not.

CPI (aka CUSR0000SA0 in this post):
https://data.bls.gov/timeseries/CUSR0000SA0

Click on "MORE FORMATTING OPTIONS" and click the following checkboxes: "original data value", "3 month percent change", and "12 month percent change" checkboxes, and then click the Retrieve Data button.

On the 3 month one it shows 1.1% for March 2024

Using the original data values
The 3 months to March 2024 is 312.230/308.742 = 1.01130 = 1.130% = 1.1% rounded

Back to the inflation calculator:

from above: "Result: $10,182.11 which is a 1.8211% increase"

This annualizes to 7.2844% if one multiplies by 4 (which nearly matches the 7.24% in your OP), or more correctly: 1.018211^4 = 1.074858 -> 7.4858% ->7.49%.

Again I don't know why, for the non-annualized 3 month increase, that the inflation calculator (1.82%) doesn't match with CUSR0000SA0 (1.13% or 1.1%)

Note that for the 12 month increase of March '23 to March '24 I did have a match in all the numbers (the inflation calculator agreed with CUSR0000SA0 -- see my post#2 above)

Edited to add - by the way, the 3 month ANNUALIZED increase using the CUSR0000SA0 original data value numbers:

The 3 months to March 2024 is 312.230/308.742 = 1.01130 (as above). Annualizing: 1.01130^4 = 1.04597 -> 4.597% -> 4.60%

On the corresponding CORE CPI number, the 3 month annualized average is 4.53%.
CORE CPI: http://data.bls.gov/timeseries/CUSR0000SA0L1E

The inflation calculator uses the NOT seasonally adjusted numbers
https://data.bls.gov/timeseries/CUUR0000SA0

All my graphs use the seasonally adjusted numbers
https://data.bls.gov/timeseries/CUSR0000SA0

BLS inflation calculator: https://www.bls.gov/data/inflation_calculator.htm
At the bottom of the page:

(emphasis added)

For the purposes of the inflation calculator and for the closest to what people are experiencing, the actual (i.e. not seasonally adjusted) that you used in your OP is the more relevant one.

So, your 7.24% (annualized) in the last 3 months -- some due to seasonal factors and some due to non-seasonal changes, is the winner.

I'll have to, in the future, at least label my graphs as being seasonally adjusted.