Inflation Higher in June


As measured by the Consumer Price Index, inflation accelerated again in June 2022.

I’ve included charts from my interactive visualization of Consumer Price Index data and news stories. To learn more about this data and access my interactive visualization of all CPI data, click here.

The Bureau of Labor Statistics, the agency that gathers this data, summarized the findings:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.3 percent in June on a seasonally adjusted basis after rising 1.0 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 9.1 percent before seasonal adjustment.

The increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors. The energy index rose 7.5 percent over the month and contributed nearly half of the all items increase, with the gasoline index rising 11.2 percent and the other major component indexes also rising. The food index rose 1.0 percent in June, as did the food at home index.

The index for all items less food and energy rose 0.7 percent in June, after increasing 0.6 percent in the preceding two months. While almost all major component indexes increased over the month, the largest contributors were the indexes for shelter, used cars and trucks, medical care, motor vehicle insurance, and new vehicles. The indexes for motor vehicle repair, apparel, household furnishings and operations, and recreation also increased in June. Among the few major component indexes to decline in June were lodging away from home and airline fares.

The all items index increased 9.1 percent for the 12 months ending June, the largest 12-month increase since the period ending November 1981. The all items less food and energy index rose 5.9 percent over the last 12 months. The energy index rose 41.6 percent over the last year, the largest 12-month increase since the period ending April 1980. The food index increased 10.4 percent for the 12-months ending June, the largest 12-month increase since the period ending February 1981.

This report, along past reports, may be found in this BLS archive.

Writing for Cato Institute in May, Alan Reynolds explained important insight:

The Consumer Price Index was up only 0.33% in April, or a compound annual rate of 4.1% — the slowest since last August. Yet CNBC, like others, reported that “The consumer price index accelerated 8.3% in April.” No, it accelerated at half that rate.

The nearly universal error is to describe the monthly change the way illustrated by the black line, as the year-to-year percentage change between April 2021 and April 2022. Although that number is routinely reported as “the” inflation rate for April 2022 it is a backward-looking average of increases over the past twelve months, with the largest increases happening about a year ago.

Popular though it is, the year-to-year change is a history of the past 12 months, relative the previous 12 months (the pandemic trough of 2020). That is a lagging indicator of what happened in 2021 rather than a coincident indicator of what has been happening in 2022.

He notes the large stimulus payments last March, and concludes:

When defining inflation over 12-month spans, logic and evidence suggest it is fair and accurate (not just partisan) to blame a few percentage points of the high year-to-year inflation numbers on the overblown March 2021 pandemic payouts. And that is because the past twelve months still includes the unusually rapid burst of inflation from April to June last year. But the payouts stopped last year, so they explain little of what happened so far this year.

For the future, we need to emphasize current data — viewing each new month one at a time while understanding that the Russia-Ukraine war is indeed boosting world commodity prices, particularly energy and food. The Fed and other central banks cannot possibly do anything to quickly reduce year-to-year CPI headline inflation because most months included in that statistic are now behind us. As for this year’s supply shocks to global food and energy prices, that could best be fixed by world peace. (emphasis added)

Based on this, I have added a new chart that calculates as Reynolds recommends: the monthly change expressed as a compounded annual growth rate. For June 22, the rate is 17.1 percent. The following examples from my visualization illustrate (click for larger versions).

Of note, inflation varies widely among products and services. The following tables hold annual price changes for items at two levels of detail. Table 2a holds broad categories.


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