Home / Federal Reserve / Price Inflation Trend: No Change
Print Friendly and PDF

Price Inflation Trend: No Change

Written by Gary North on June 19, 2013

The financial media report that the consumer price index jumped in May. But the CPI is not the right index to watch if you want to know what the underlying price trend is. Far more reliable is the Median CPI. It’s the “steady Eddie” of price indexes. There was no change in the rate of increase in May: 0.2%. That was what it was in April, too. Also December, January, and February.

The CPI has been wildly volatile over the past four months. See for yourself.


Does this make a lot of difference? No. The Federal Reserve has said that as long as the CPI does not go above 2.5% per year, it will not change its QE3 program until the unemployment rate falls to 6.5%. The Federal Open Market Committee, which establishes FED monetary policy, said this in March.

In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.

Unemployment rose from 7.5% to 7.6% last month.

The FED will continue to counterfeit $85 billion a month, or a trillion dollars a year, to stimulate the U.S. economy. The FED’s economic policy-makers believe in a theory of economics that says that creating digits out of nothing which the U.S. government can then spend into circulation is the foundation of wealth creation. If this theory of wealth creation is true, this means there is lots and lots of wealth ahead of us.


Continue Reading on www.clevelandfed.org

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

4 thoughts on “Price Inflation Trend: No Change

  1. John Neese says:

    "Lots and lots of wealth ahead of us." US is defined as to which class of people??? Most likely it's the same ones that have been making a killing sense this Fed's experiential get-go started.

  2. Whoever is responsible for creating the non-informative CPI truly deserves an award as bureaucrat obfuscator of all time. If we are seriously being told that the annual rate of inflation is less than 2.5%, how are we to square that with the rising prices at the grocery store and the gas pump? Particularly blatant is the implication from this chart that food and energy costs mitigate the CPI DOWNWARD, as the CPI shows higher when these items are supposedly removed from the equation. Suffice it to say, I believe the entire operation of this bogus statistic is grounded in deception and wholesale fabrication of numbers which are in no way influenced by reality.

  3. What do you suggest that we can do to change the CPI to accurately represent the true rate of inflation?

  4. 1baronrichsnot1 says:

    Gary's article is good, however we must look at the previous years all the way back to 1967, the year gold was allowed to be owned again. It was $32 per ounce, we have had about 1250% inflation in the consumer cost of living index CLI, which includes all taxes old and new, new mandates, old mandates, massive inflation in SS and Medicare, plus the CPI including the increases in food and energy. All told these total 1250% over this 46 year period thus 1250%devided by 46= 27% per year average CLI or money we have to lay out each year to have the same amount of services and goods as last year. That reflects everything except the wages we collected, which are falling. It reflects the value of our currency. Gold being roughly $1250 per ounce now, just says gold is priced about right, and anything priced over 1250% cost esculation since 1967 is a bubble, until the next year..Just saying, nothing except the CLI tells it like it is……