Wednesday, April 19, 2006
Core CPI Spike Within Normal Expectation
Getting this 0.3% surprise increase in the core CPI, I was reminded that we saw a similar spike about a year ago. A headline reporting the largest increase in one year induced me to indulge in a little number crunching. It's been a while since I've dug up anything particularly exceptional out the economic data, so I've been overdue.
As it turns, such volatility in price increases is completely normal. And though not consistently seasonal, the March core CPI increased 0.3% the previous two years. So this is the third year in a row for this event. There was only one year in the last ten that the core CPI didn't spike up to an increase of 0.3% at least once in the year. That's happened 26 times in the past 10 years, twice per year on average.
Historical average monthly increase in core CPI:
1957 – Present: 0.33
1986 – Present: 0.25
1996 – Present: 0.18
Last twelve months: 0.17
Conclusion: The current amount of core inflation is historically normal.
Below is a chart comparing seasonally and non seasonally adjusted core CPI data for the past ten years (click on the image to increase the size):
posted at 5:05 PM
