Inflation Fell to 1.9% in the Second Half of 2022 from 10.7% in the First

Alan ReynoldsIn the first half of 2022, January to June, CPI inflation averaged 0.89% a  month (nearly 1%). In the second half, the monthly changes averaged 0.16% (less than two‐​tenth of one percent).Just multiply the average monthly inflation rate times twelve to see that the annual rate of inflation slowed from 10.7% in the first half to 1.9% in the second.Reducing inflation by 8.8 percentage points for half a  year seems worthy of more attention. Instead, top Fed officials and uncritical journalists keep speaking and writing as though the change was barely discernable, merely a slight easing. The reason for that nearly universal misunderstanding is the perennial confusion of year‐​to‐​year chan ges (a 12‐​month average) with what has been happening recently.A typicalWall Street Journal report thus sees only “a slightly more optimistic outlook for inflation.” That is because, “as measured by the year over year change… inflation has eased from 9.1% last June to 6.5% in December.”Similarly, at his December 14 press conference,Chairman Powell said, “In November,the 12 ‐​month change in the CPI was 7.1 percent … The inflation data …for October and November show a welcome reduction in the monthly pace of price increases. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.” Yet there had been several months of near‐​zero inflation by No vember, with a presumably welcome 2....
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs