Friday , 22 September 2017


Official and ShadowStats Monthly Inflation Rates: 1872 to Present

Latest Annualized Official CPI Inflation Rate is 1.63% vs. ShadowStats’ Alternative Rate of 9.07%!

[There is a considerable difference between the official BLS inflation rate (1.63%) and the ShadowStats’ alternative method of calculating consumer prices (9.07%) but] I believe that the optimum method is probably somewhere between the two. [Let me explain.] Words: 390

So says Doug Short (www.dshort.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has further edited ([  ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.) Short goes on to say:

The latest official annualized inflation rate of 1.63%… marks the 16th month of mild inflation after a streak of eight consecutive months of deflation. The annualized rate is well below the 3.97% average since the end of World War II. We have been experiencing a general trend lower from the January 2010 annualized rate of 2.63%.

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The Bureau of Labor Statistics (BLS) has compiled CPI data since 1913. Our chart below shows inflation back to 1872 by adding Warren and Pearson’s price index for the earlier years.  This look further back into the past dramatically illustrates the extreme oscillation between inflation and deflation during the first 70 years of our timeline.

Click to View

The ShadowStats Alternate Rate of Inflation is 9.07%!

The chart below  includes an alternate look at inflation without the calculation modifications the 1980s and 1990s (Data from www.shadowstats.com).

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Conclusion

Government policy, the Federal Funds Rate, interest rates in general and decades of major business decisions have been fundamentally driven by the official BLS inflation data, not the alternate CPI. For this reason I believe that the optimum method for calculating consumer prices is probably somewhere between the revised BLS method and the historic method preserved by John Williams of ShadowStats which, while interesting, is not authoritative.

*http://dshort.com/inflation/inflation-update.html

Editor’s Note:

  • The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
  • Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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Inflation