The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in December on a seasonally adjusted basis after rising 0.8 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.0 percent before seasonal adjustment.
Why would you seasonally adjust a 12 month number? Does not Christmas occur every year at the same time?
In any event this is 1982 style inflation, and exactly what both Trump and Biden, along with Congress, should expect having dumped credit into the economy with wild abandon for the previous two years.
The all items index rose 7.0 percent for the 12 months ending December, the largest 12-month increase since the period ending June 1982. The all items less food and energy index rose 5.5 percent, the largest 12-month change since the period ending February 1991. The energy index rose 29.3 percent over the last year, and the food index increased 6.3 percent.
The nasty part is that energy and food are inelastic demand items for most households. That is, you have to buy them and you have to buy them in more-or-less constant amounts. They're not really optional for anyone, and for the lower income folks shifting food consumption isn't much of an option (the rich man can go out one time a week fewer and eat a hamburger instead of steak; the poor man is already eating hamburger and might wind up with Alpo!)
What's really bad is that the CPI-W, which is the index for urban wage and clerical earners was up even more, 7.8%. This index reflects the impact on mostly lower to middle income wage employees in cities, who are getting hammered even worse than the averages suggest.
You want to know why you shouldn't support shutting down coal-fired power plants? How's a 24% increase in piped gas cost sound? Want to translate that directly into your power bill? Oh by the way, wind/solar would be even worse since petroleum products figure big into production of both despite the claims of certain climate screamers.
Finally, the scam of Owner's Equivalent Rent continues in this data, which I've pointed out since I began this column. It implies that the cost of buying a house has only gone up 3.8% over the last year. I'd like some of whatever they're smoking.