CPI - year over year; not looking pretty

The latest Bureau of Labor Statistics (BLS) CPI numbers are out this morning and they don't look pretty.

BLS August 2011 CPI news release

UPDATE 19 September 2011

With the benefit of the context we established in Providing some Context for looking at CPI charts  we can now revisit  this month's collection of CPI charts and see what stories they might have to tell.  We can see there are some striking changes underway the past 9 months for both the headline CPI figure (blue line) and the Core CPI (red line).  

But with such a short window, it's really hard to interpret what this chart is trying to tell us.  Is this a significant inflation trend taking off and something of real concern, or is it more a matter of these metrics undergoing reversion to their mean values.  We will be posting comments in chronological sequence for our other recent CPI posts that include charts over the next few days and perhaps we can better understand what this chart means once we have looked at the others.

We will be color coding our updates to distinguish them from the original post. 

End Update

The all items index has increased by more than 3x over the past year
Excluding food and energy, the increase is more than 2x.

While this is a nice crisp clean easily understood chart, this view shows only the past 12 months and is way too short a window all by itself.  Longer views would help put the latest numbers in better context and allow the development of a supportable storyline.  But the BLS tradition is to go with their template approach using short 1 month and 1 year durations for most of their findings.  For example, see the story lines shown below in the lead paragraph (emphasis added showing the small number of instances of longer views)

CONSUMER PRICE INDEX – AUGUST 2011

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 3.8 percent before seasonal adjustment.

The seasonally adjusted increase in the all items index was broad-based, with continuing increases in the indexes for gasoline, food, shelter, and apparel.

The gasoline index rose for the 12th time in the last 14 months and led to a 1.2 percent increase in the energy index, while the food index rose 0.5 percent, its largest increase since March.

The index for all items less food and energy increased 0.2 percent in August, the same increase as the previous month. Shelter and apparel were the biggest contributors, though the indexes for most of its major components posted increases, including used cars and trucks, medical care, household furnishings and operations, recreation, tobacco, and personal care. The new vehicles index, unchanged for the second month in a row, was an exception.

The 12-month change in the all items index edged up to 3.8 percent after holding at 3.6 percent for three months, while the 12-month change for all items less food and energy reached 2.0 percent for the first time since November 2008. The energy index has risen 18.4 percent over the last year, while the food index has increased 4.6 percent. 

We'll keep our eye out for other postings this morning with longer time line views which should help clarify the picture and help us evaluate just how serious the most recent 12 month behavior of CPI is likely to be.