CPI update: Um, not so fast!


Several readers (and Peter Bookvar) have suggested going to the Cleveland Fed CPI data:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (3.0% annualized rate) in November. The median CPI is a measure of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers was unchanged in November. The CPI less food and energy remained largely steady (rose at a 0.6% annualized rate) on a seasonally adjusted basis.

Over the last 12 months, the median CPI rose 3.7%, the CPI 2.0%, and the CPI less food and energy 2.6%.















































































Percent Change From Previous
June July Aug. Sep. Oct. Nov.
CPI 0.2 0.4 0.2 -0.5 -0.5 0.0
CPI less food & energy 0.3 0.2 0.2 0.2 0.1 0.0
MEDIAN CPI 0.4 0.4 0.3 0.3 0.3 0.2
Percent Change, Last 12
June July Aug. Sep. Oct. Nov.
CPI 4.3 4.1 3.8 2.1 1.3 2.0
CPI less food & energy 2.6 2.7 2.8 2.9 2.7 2.6
MEDIAN CPI* 3.2 3.3 3.4 3.5 3.6 3.7



Now, I am not suggesting that this CPI measure is inherently better then that of BLS. But it certianly squares with reality a bit better than the NO INFLATION stuff of 8:30am . . .

Annualized Inflation Level

Jan-06  0.0021487  2.6
Feb-06  0.0028339  3.5
Mar-06  0.0040651  5.0
Apr-06  0.002715  3.3
May-06  0.0035353  4.3
Jun-06  0.0037249  4.6
Jul-06  0.0035618  4.4
Aug-06  0.0027895  3.4
Sep-06  0.0029203  3.6
Oct-06  0.0029925  3.7
Nov-06  0.0024863  3.0

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What's been said:

Discussions found on the web:
  1. rex commented on Dec 15

    This gauge IS better than the core CPI because it does not automatically exclude food and energy prices to get at “core” or “underlying” inflation. The Cleveland Fed figures out the median price increase for many categories of goods and services. In this case, the median CPI also confirms a definite slowing in inflation in November. After rising by 0.3% or 0.4% for 9 straight months, we got a 0.2% gain in November. That’s very good news.
    It’d be good if folks focused on the Cleveland Fed’s median CPI and the Dallas Fed’s trimmed-mean PCE price index. They really are better.
    And they are better than trying to rely on your own experience or anecdotal information. Go with the Force, Barry.

  2. super-anon commented on Dec 15

    Unless I am misinterpreting the Fed CPI data, it still confirms the trend even if the values are different, correct? (i.e. the Fed CPI report does not contradict the BLS CPI report’s indication of tamer inflation)

    CPI 1 month annualized

    Aug-06 3.4
    Sep-06 3.6
    Oct-06 3.7
    Nov-06 3.0

  3. super-anon commented on Dec 15

    Ah, thanks Rex – I think you answered my question. I was just about to call my broker…

  4. bodanker commented on Dec 15


    Annualized MOM CPI changes is a pretty noisy series, so I’m not sure what conclusions one can draw from it (i.e. one month doesn’t make a trend).

    If you look at YOY changes in core CPI and median CPI, you’ll see that core CPI has ticked down in recent months, but median CPI has continued to increase.

    Just some food for thought.

  5. jjr commented on Dec 15

    From my reality, which often consists of (1) 14″ laptop display and (1) 15″ color television, there is a certain giddy sort of toppiness to this market.

    It’s funny that the bulls and the bears that surface up in the comments of Barry’s blog and others are both pointing the finger at each other and saying “me contrarian”, “you part of the crowd”. We can’t all be contrarians. The best contrarian signal is that formerly market bears have started making bullish calls. Who was the cracker on CNBC today from Merrill or whichever bulge bracket firm it was?

    The reality that I’m seeing is a whole lot of “in your face” bluster by the so-called bulls. Is that bullish? Don’t think so. How about the seemingly meaningless banter on CNBC about how a rise in the mothership would allow the children’s college to be paid for. I don’t remember the anchors who were involved in the exchange. The mothership is obviously GE, and I am under the impression that GE stock is the only equity that CNBC anchors are allowed to own. Their giddiness, and their manufactured meaningless milestones … how ’bout them? Bullish or Bearish? How about all these calls we’re getting on the S&P in ’07 for 1500, 1600? That’s bearish? Again, calling for a rise in the markets at this stage is contrarian how?

    How about all the insane momentum chasing that’s been taking place in marginal issues? Bullish or Bearish? EFUT? Give me a break. What about the rumors in MAMA the past few days that have led to run-ups followed by sell-offs? Why does Mark Cuban have to come out and deny that he’s buying shares? Once again, is this bullish or bearish? One-day reversals … take a look at FTEK yesterday? That wouldn’t be sign of a top, would it?

    I’m going out on a short limb and predicting a rather unsurprising sell-off come January 2. Harken back to January 2005 and tell me what happened once the tax year rolled over? A lot of postponed gains were taken. Why should it be any different this time. Nobody who is up for the year wants to book another profitable trade and increase their tax burden. This song has played before. There’s a decided lack of selling pressure for this reason. There is a decided increase in buying pressure by the alpha seeker fund managers and traders who need to chase performance and meet or beat their peer’s numbers.

    Sure, everything is coming up roses right now if your trading timeframes are seconds/minutes/hours. My timeframes are weeks/months/years, and things are not nearly as cut and dry. It ain’t just the housing market that is a problem. It’s the giddiness in the markets. It’s the slowdown in manufacturing and trucking. If you care to hang your hat on lagging indicators like employment and retail spending, well then no worries. Good luck.

  6. Bob_in_ma commented on Dec 15


    For months you went through all sorts of histrionics over the CPI not counting real inflation, using a core rate was misleading, etc. When the headline rate went flat-to-negative you stopped mentioning it. Today you posted several downright factual errors, as I’ve shown.

    Now you point to another measure that currently shows a higher CPI.

    You were wrong about inflation. If you are still looking for a resurgence in inflation, you are still wrong.

    The danger over the next few years will be over-supply. We have an over-supply of houses, automobiles, cellular phones and big screen TVs. Within a year, you can add steel and most industrial products. And most commodities won’t be far behind.

    If you’re right about the slowdown, you’re wrong about inflation. You’ve become a Cassandra, and an inconsistent one.

    When will your TV show be airing?

  7. cm commented on Dec 15

    Is this stuff seasonally adjusted? Anecdotally, local grocery store prices have developed in a more benign pattern the last 3+ months, with more “sales”. OTOH perhaps that’s just the holiday season.

  8. stan commented on Dec 16

    One senior (me) sees:
    SSI Benefit= +3.3%
    Part B Premium= +5.65%
    Health Supplement Prem= +8.5%
    Prescription Drug Plan Prem= +14.6%
    But that’s nothing compared to how much the prices of fresh oranges have gone up. No way most seniors can retire without facing the REALITY of REAL inflation eating them alive.

  9. brion commented on Dec 16

    Ditto Stan… I don’t quite remember when the $100 dollar bill became the “new” $20 but it has….

    I used to routinely leave the store with a $60 dollar receipt. These days i feel “frugal” having left with an $80 dollar one.

    btw, anyone have a $ per barrel oil chart for ’06 to overlay Barry’s?

  10. Barry Ritholtz commented on Dec 16

    Bob in MA (please shoot me your email address),

    Is it your position that there is no inflation? Price stability has been achieved? In fact, we’ve been exactly correct about inflation for 3 years — there’s been lots of it, and its been under reported. The fact that late 2006 inflation is softening does not make the prior 8 quarters of astonished disbelief incorrect!

    As the economy cools, inflation will subside (been saying that for a while). But I sure as hell don’t beleive inflation is now ZERO (M-o-M).

    Things occur in phases — 1% fed rates were a huge stimulus — that led to a REflation of the economy, followed by rising INflation. As that stimulus faded, so did the economy — the slow-motion slow-down. Now, as we cool, inflation exists, but at a slower rate.

    I believe that is both consistent, and an accurate representation of what actually occured.

    Of course, you should feel free to buy into the BLS/Commerce Dept/Treasury stats if you like. And you can also believe the war is going swimmingly well in Iraq also. I choose to question what disagrees with what I see with my own lying eyes.

  11. Bob_in_ma commented on Dec 16

    “Of course, you should feel free to buy into the BLS/Commerce Dept/Treasury stats if you like. And you can also believe the war is going swimmingly well in Iraq also. I choose to question what disagrees with what I see with my own lying eyes.”

    Barry, that is the cheapest form of rhetoric.

    You’re biggest problem is you can’t admit you wrong, add to that your use of straw men (anyone who disagrees with must think the opposite view to the extreme), and increasingly, the semi-veiled insult, and you are all ready to be a TV pundit.

    Congratulations. You have gotten what has clearly been your objective for the last year.

  12. Barry Ritholtz commented on Dec 16

    Speaking of rhetorical devices, you never answered the question (or sent your email address)

    To repeat: Are you saying there is no inflation? Has Price stability been achieved? Do you believe what comes out of BLS and Commerce regardless?

    Any chance BLS reformulating their sample survey is wht retail was up 1%? (Gee, the WSJ/NYT missed that one)

    I have no interest in becoming Winston Smith — so do not expect to come here and read regurgitated gov’t data.


    Also, your expectations for the January announcement are way off . . .

  13. bushsux commented on Dec 16

    Not really sure what you expect of Barry on HIS blog. Hello? His blog…think about it. And Barry, no need to be defensive or thin skinned here. Bob is annoyed because you want to arrange your blog and your analysis the way it suits you best. There is an agenda behind everything written in the world and if Bob can’t handle the truth? Bummer. For him.
    Now shake hands and come out civil and agreeing to disagree. Or not. Ciao.

  14. ECONOMISTA NON GRATA commented on Dec 16

    Don’t confuse me with the markets. Having said that, I agree whole heartedly with Barry as the question stands. Should we believe the numbers…? I say the numbers don’t add up…. And further more, the actions related to the numbers are not consistent in any form. I’m with “jjr”. Except I’m not waiting for 2007. I’ve already entered with my initial possitions and a big part of that is being short S&Ps. However, I’m not expecting any fireworks until early 2007.

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