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Ask HN: Why does the media say inflation is up every month?

55 points by galdosdi ↗ HN
I'm posting this on this forum because this is an innumeracy issue and you folks are very numerate. If I discuss this anywhere else the politics and emotions will distract, but the numbers are the focus here:

The last three months, core CPI month over month have been 0.0%, 0.1%, and 0.4% respectively (annualized rates of about 0%, 1%, and 5% respectively, or about 2% overall)

Yet for three straight months every time these numbers come out the NY Times and other media plaster a front page story saying "Inflation is stubbornly still at 8.9%" or something, because they are choosing to use a 12 month rolling average, but they all talk about it as if that's just natural, not a choice (and a questionable choice that is at too coarse a level to see what's happening RIGHT NOW)

Certainly there's plenty of nuance to go around -- inflation has been very low for 3 months, but was rather high for months before that, so it's hardly time to celebrate yet. But the indicators from the most recent 3 months are consistently VERY GOOD if you want inflation reduced, and this part, which is also the more news-worthy part, is not getting any attention.

What's up with this? Mainstream media has always been a little innumerate but this is a whole other level. Is it innumeracy in journalism, ideological bias, general fearmongering to sell papers, or what?

94 comments

[ 2.6 ms ] story [ 160 ms ] thread
bell-cot
If it bleeds, it leads. You don't get clicks/viewers/readers with "Things are getting better in some complex-but-dull way" sorts of stories.
NickC25
Exactly this ^^.

Negativity has always sold more than positivity. It's why we "can't help but watch" when we know something bad is about to happen despite our instincts telling us we should look away.

In the age of websites needing clickbait headlines to sell advertising, this phenomenon is exacerbated tenfold.

ianai
Except this year media sentiment plays into political lies. There’s a major party placing people in all the right places to choose election winners into the future. So the US just might lose its normal political way and indeed freedom because of inflation.
xboxnolifes
The media has always played into political lies.
spaceman_2020
That’s not relevant in a situation where inflation is actually increasing month over month, usually at a far higher rate than expected.

This month’s core CPI was expected to be 0.2%. It ended up being 0.4%.

Headlines about increasing inflation are not being hysterical; they’re being factual.

tchalla
Are inflation numbers usually reported the way you suggest?
galdosdi
Yes, month over month is the raw source data[1] the BLS reports once a month. The news articles I am referring to are the ones that come out once a month the day or day after the BLS statistics come out.

[1] https://www.bls.gov/news.release/cpi.nr0.htm

outside1234
They also don't announce that it is a global problem and actually Germany has even higher levels of inflation.

And the reason for that is that those "everyone is dealing with inflation" stories don't generate clicks.

dixie_land
Everyone is suffering does not mean no one is suffering. You probably think North Korea is the best country since everyone (except Kim) is equally starving to death
outside1234
Definitely not suggesting nobody is suffering. I am just explaining why they don't put anything in context.
mjthrowaway1
“Consumer prices in the US were up 0.4% month-over-month in September of 2022, the highest reading in three months, and twice the market expectation of 0.2%. Increases in prices of shelter (0.7%), food (0.4%), and medical care services (1%) were the largest of many contributors to the increase.”

Doesn’t seem all that much rosier to have 0.4% MoM with interest rates where they are and GDP declining.

the_gastropod
Those are the "raw" CPI numbers. Core CPI excludes food / energy since those tend to be quite volatile. Raw CPI is still quite high. Core CPI, which is generally regarded as a better predictor for long-term trends, is looking pretty good.
spaceman_2020
How is core CPI “looking good”? It was 5.9% in July, 6.3% in August, 6.6% in September.

That’s the opposite of “looking good”.

colinmhayes
You're quoting backward looking numbers, not forward looking ones which is the entire point of this post. If core went up 6% in january and 0 since then you could say the same thing, but no one would think it's a problem.
spaceman_2020
I'm not sure I follow. The trend is clearly on the up month-over-month, not down or flat. Is there any other way to infer this?

Genuinely curious.

gamechangr
I dont know this to be verified, so perhaps those who are interested could look into this.

I have heard the argument that 3 months before every election and/or midterm election ( Nov 8, 2022) inflation is managed to lower numbers.

That could be one reason.

Usually it's used to improve the annual inflation rate. If that's true then you can comment in Dec and Jan if Inflation rates go up again.

buildingsramen
I think that sounds conspiratorial. If there is someone in elected office who has this sort of control, why not do it year-round?

Since this is a worldwide trend, how are they able to control it outside their borders?

ponco
As an Australian, with an economy always experiencing very high inflation (8%) I just immediately question what is the composition of the US CPI. Perhaps it’s not reflective or is disproportionately weighted
amelius
In some places it has become impossible to buy a house for some income levels.

Should the CPI be infinite?

rr808
Do you really think most of the US public really care about details? Prices are going up, things are expensive, people click outrage headlines.
outside1234
Well the details ARE important. Almost every country that produces non-biased statistics is seeing inflation. This information is important because it points to a global problem and not a local policy problem.
Mikeb85
> This information is important because it points to a global problem and not a local policy problem.

It only seems like a global problem because most governments had similar local policies. There are some countries with very low (as in normal) amounts of inflation at the moment.

SoftTalker
I think most people don't care about percentages, this month vs last month or this month vs this month last year, etc. They do care about rising prices on the shelf at the store, or gas at the pump, and these are very noticable regardless of what the media is saying.
phpisthebest
For the most part people care, index, and budget based on their income. For most people that changes on an Annual Basis so looking at price flucuations from July 2021 to July 2022 is a more accurate and proper way to look at inflation as it impacts the normal every day person, than looking at inflation variance from Aug 2022 to Sept 2022.

I care that I was buying beef at $3 / lb last year, and now am paying $6/ lb today, not that I was buying beef at $6/lb last month and it is still $6/lb this month... I want my $3/lb beef back

conductr
The MoM reporting for beef price inflation would be ~100% for several months after it hit $6/lb as it's rolling 12 months. That doesn't mean it's $12 in August, then $24 in September, etc. That's the impression laymen folks get based on the media reporting.
Y_Y
"laymen" is already a noun like "laity" for which the corresponding adjective is just "lay"
conductr
Thanks for the clarification. I've never heard or seen the word "laity" but have become wary of using gendered words on the internet so added "folks" without much thought. Sign of the times I suppose, hard to please everyone.
UtopiaPunk
"Lay people" or "lay folks" would work.

I only hear the word "laity" used in church (meaning the people who are not the clergy).

mech422
Unless I'm mistaken...'most' people are still living pretty much paycheck to paycheck, and budgeting based on what they can afford at the moment. TBH though, I haven't looked lately. Anecdotally, no-one I know complains about beef being $3 last year...they are more concerned with it being $4/lb last MONTH and $6/lb now. Gas seems to be especially prone to this, people seem to budget gas on a more 'weekly' basis.
JumpCrisscross
> no-one I know complains about beef being $3 last year...they are more concerned with it being $4/lb last MONTH and $6/lb now

The point is this isn’t happening. CPI is up less than half a percent since June [1].

Core is more consistently rising [2]. But beef costs about what it did in March [3][4]. (We have to go back a decade to find ground beef at $3/lb.)

[1] https://fred.stlouisfed.org/series/CPIAUCSL

[2] https://fred.stlouisfed.org/series/CPILFESL

[3] https://fred.stlouisfed.org/series/PBEEFUSDM

[4] https://fred.stlouisfed.org/series/APU0000703112

mech422
I wasn't contesting that, just pointing out I don't think 'most' people budget annually. For that matter, most I know don't seem to remember last years prices good or bad. They are more worried about the present.
phpisthebest
>and budgeting based on what they can afford at the moment

That is not budgeting, that is choosing what products to buy based on your budget.

One would set a budget of say $400 a month for groceries based on their income, this is would be fixed for the year. then when they go to the store, or make a shopping list that choose Chicken or Beef, Frozen or Fresh etc based on the current prices and what will fit into that budget.

> Anecdotally, no-one I know complains about beef being $3 last year...they are more concerned with it being $4/lb last MONTH and $6/lb now

Both are a concern, but only one deals with budgets. The $3 is important because that was the baseline for which the budget was set, choices on employment, hours, overtime, finding a new job, going back to school etc are based on this budgeting

the Mo over Mo prices factor not into the budgeting, but into if you buy 1lb and some beans for your chili, or 2 pounds of beef and no beans so you can make "real chili":) .. Of if you buy a steak vs ground beef, or chick...

Those are purchasing choices at the moments for the exact goods and services that will be consumed under your budget

mech422
>>One would set a budget of say $400 a month for groceries based on their income, this is would be fixed for the year.

That's sorta hard to do when your paid hourly and your schedule is pasted weekly. That was my whole point - the OP sorta assumes a LOT more stability then many people have.

I guess the best way to say it for everyone would be: I don't think 'most' people have the luxury to be able to 'budget', and I'd say a fair number run from crisis to crisis just trying to survive.

jerlam
There's also the concept of price anchoring, where people believe that something they purchased has the same price long enough, they start to think that it always should have the same price (regardless of everything else). And some people just love to complain about everything.

During my childhood, my parents loved to comment about how gum/candy was a nickel when they grew up. They don't complain about the price of anything else going up, even though undoubtedly all the food prices have gone up in multiple decades. But they only bought candy at a short period in their life, and the price was the same from when they started and when they stopping buying candy, so they only have the "one true price" in memory. Everything else they have to purchase regularly so they're exposed to increasing prices. Just not candy.

jwarden
I think the truthfulness of media reporting is best evaluated based not on literal factual accuracy, but on what it causes people to believe. Factual accuracy is not sufficient without other information needed to put those facts into context.

Either the media doesn't adequately explain or the average person doesn't adequately understand the YoY numbers. Either way, media is responsible for causing the average person to believe something that is not true (that prices are going up faster each month than they actually are).

It's true that YoY numbers can be more meaningful to the normal every day person, but only if they understand them. It might be better if people understood that prices, relative to a year ago, are not increasing in recent months at an 8.9% annualized rate.

ozb
Note core inflation (excluding food and energy, which are generally more volatile) has been at least 0.6% (annualized >7%) for 5 of the last 6 months https://www.bls.gov/news.release/cpi.nr0.htm

So arguably the narrative is somewhat justified.

But also, I wouldn't be surprised if many in the media are just blindly reacting to the 12-month numbers (8% bad!)

bryanlarsen
Core inflation is a lagging figure. For most people, rent and wages only change once a year. So if a company decides to raise rent or wages, it might take up to 11 months before it affects you and shows up in the inflation numbers.

So high monthly core inflation may mean that core inflation is still rising or it may mean that we're just seeing a lagging indicator from the inflation this spring.

ozb
Perhaps, but 0.6% core inflation MoM is still a more updated metric than 8.2% (overall) YoY, which is explicitly ignoring that overall inflation has subsided in the last few months.

That is, I agree with the OP if all we have are the non-core numbers, but with the core numbers it's more nuanced.

beschizza
The annualized rate is the standard measure and in itself isn't a problem until it's being used to conceal newsworthy changes to the underlying economic trend.

You've pointed on out one thing (Core CPI month over month) in that respect.

More egregious, though, is when media pose the annualized rate AS the month-over-month rate. This happens far too often. The problem is not usually the stories, but the people writing the headlines: innumerate editors who are interested mostly in sensational brevity.

outside1234
And when they don't report that nearly every country that produces non-biased statistics is seeing inflation - it a global problem and not a local policy problem.
RyanShook
The main reason inflation is hard to measure is that it is not uniform and CPI is a poor representation. Even if the basket of goods used for the CPI is level there are many goods not included in CPI that are still increasing in cost. I agree that the CPI number may be optimistic but I think most people and news organizations recognize that CPI is no longer a good measure of inflation.
the_gastropod
The FED hasn't measured inflation by CPI since February 2000.
etchalon
To paraphrase Jon Stewart, because the media's worse bias is towards sensationalism and a bit of laziness.
kristjansson
That is the traditional number reported for inflation. If a news source says “inflation was x%” I understand that to mean “CPI is x% higher than 12 months ago”. It’s still a terrible way to present the information, for the reasons you point out.
jjslocum3
This is a timely question, given the front-page headline on this morning's WSJ: "U.S. Core Inflation Hit New Four-Decade High Last Month." Here's an excerpt:

"Prices excluding energy and food rose 6.6%

The increase marked the biggest annual rise in core prices since August 1982, a sign that persistent increases are becoming entrenched in the economy. The overall CPI rose 8.2% in September, down slightly from the previous month’s gain."

I admit I don't know enough to tease out whatever subtleties you're referencing; can you explain what about this is misleading?

theptip
I think the complaint is that the “biggest annual rise” part gets lost/diluted; it is in there but much of the messaging sounds like prices just shot up this month instead of this being a YoY observation.

I.e. coverage doesn’t emphasize or analyze that it’s a 12-month trailing average. (And, it could even be going down MoM and still give you a YoY increase if lots of increase happened 6mo ago; that might be the opposite valence of news.)

WSJ probably being one of the more technical papers so that’s a best-case version there.

JumpCrisscross
> can you explain what about this is misleading?

Core CPI was 280.02 in September 2021 [1]. It was 296.95 in August and just printed at 298.66. Up 6.6% from a year ago and 6.7% annualised from a month ago. Nothing misleading.

Regular CPI, which includes commodities like food and energy, was 274.21 in September 2021 [2]. It was 295.62 in August and just printed at 296.76. Up 8.2% from a year ago but 4.6% annualised from a month ago.

The difference becomes clearer examining the graphs. Stylistically, core CPI linearly increases. Actual CPI surged before flattening since June (295.328, less than 2% annualised).

[1] https://fred.stlouisfed.org/series/CPILFESL

[2] https://fred.stlouisfed.org/series/CPIAUCSL

conductr
I was in a ~12 person group conversation this past weekend and most people genuinely thought the continued reporting of the rolling average was ~10% compounding monthly. I hate being a "know it all" type in casual social situations but it was so disconnected from reality that I had to put on my mansplaining hat and give everyone a lesson on how these things work.

Unfortunately, the media is to blame for this and their motives are aligned with the misinformation. They do a horrible job with almost all numerical reporting.

nathanaldensr
I wouldn't call that "mansplaining;" it's just correcting misperceptions.
conductr
Please tell that to the women in my life and see what they claim you're doing :)
sudden_dystopia
They use 12 months because some of the indicators lag by many months. Some data is only generated quarterly or biannually so looking at a smaller timeline wouldn’t really be helpful. The real issue is that CPI is not a poor metric anyway. It was watered down in the 80’s for political purposes to make them look better(on both sides, not one party or the other). Quite frankly, I don’t trust CPI. In my opinion, the best metric for inflation is your eyes vs the rate of change in prices. If you notice several price increases over a span of several weeks, inflation is a problem.
merely-unlikely
Chipotle is my anecdotal barometer. The first burrito I bought a decade ago was ~$7. Last week it was almost $20.
itake
How? Chicken burrito with no extras is like $9.50 in Seattle post tax
genghisjahn
Well, a decade ago you didn't order the burrito and have it delivered with Uber eats.
icedchai
I use a "large pizza", myself (3 toppings, if you wanna get specific.) It used to be ~$20, now it's ~$30.
galdosdi
I bought a Chipotle burrito for about $9 or $10 just a couple months ago. I live in a major east coast city. What do you do, ask for every damn topping, triple avocado, etc?

BTW, fast food prices have inflated much faster than grocery store food, because labor has inflated more.

So the lazier you are about cooking, the more this will impact you. But for those who mostly buy non processed foods and cook them at home, and vary their diet seasonally, using the produce that's currently on sale, it's been a pretty tiny impact over the last couple years in the food category.

Mikeb85
YoY is the most common measure because many prices and things that happen in the economy are seasonal. Also lots of economic data and prices are only compiled quarterly or yearly so again, YoY makes the most sense.

MoM can show trends but isn't particularly useful otherwise.

breischl
I think you touched on it in your last sentence. It's not actually innumeracy, it's an example of "lying with statistics" to get attention and/or push an agenda (depending on the source).

Tangentially, thanks for bringing this up. I've personally been vaguely aware of all the "inflation is high!!!!!!" articles and hadn't dug in enough to see the reality prior to this post.

ravenstine
All you had to do was visit the very first search result with the domain bls.gov.

https://www.bls.gov/cpi/

> In September, the Consumer Price Index for All Urban Consumers increased 0.4 percent, seasonally adjusted, and rose 8.2 percent over the last 12 months, not seasonally adjusted.

That's where the figure comes from. "12 months" is the key aspect.

Either the media is misreporting its context or people are just not understanding what it means.

Pretty much every source I've come across that sites that year-over figure reports it accurately.

https://www.pbs.org/newshour/nation/u-s-inflation-at-8-5-per...

> Consumer prices jumped 8.5% in July compared with a year earlier, the government said Wednesday, down from a 9.1% year-over-year jump in June. On a monthly basis, prices were unchanged from June to July, the smallest such rise more than two years.

https://www.nytimes.com/article/inflation-us-prices.html

> The government reported on Friday that consumer prices climbed 8.6 percent over the year through May, the fastest rate of increase in four decades.

And no, 8.2% inflation over a year is not a good thing. It's not necessarily the worst thing ever, but that's not a minuscule amount of value to lose from your dollar.

kotlin2
I think the OPs point is that the YoY numbers are largely meaningless. I don't think the Fed is trying to cause a period of deflation where we'd go back to the prices we had a year ago. Rather, they're trying to at least get inflation flat so prices stop growing. Where OP is wrong is that MoM inflation is not flat. It's quite high when annualized (~7% the last two months).
ravenstine
Their point isn't correct. Neither one is meaningless, and just because a particular month is more inflated than another doesn't even mean that a year overall is inflated. The fact is, if one had let their currency sit in the bank since Jan 2022, at least 8% of the value of that currency is lost. Assuming that a fraction of a percent of inflation in a given month isn't that significant is a human failing of comprehending the long term. People shouldn't just be blowing their earnings every month. They should be at least saving some of it and maybe making some investments, in which case YoY inflation is a big deal. If one has $100,000 sitting in the bank for a year, that's around $80,000 that might as well have been set on fire because that $100,000 has less buying power.

My issue with the OP wasn't this exactly, but that they were implying that news outlets are being deceptive when reporting inflation. I'm not one to defend journalism, but these articles make it pretty clear that it's YoY inflation they're referring to.

kotlin2
What you’re saying is true, but not really related to the policy makers decision making process at the moment. If inflation were up 8.5% YoY but MoM was flat for the last three months, the tone of the conversation would be very different. The original July numbers were flat, and everyone was excited to predict the Fed pivot that would occur any day. If only…
colinmhayes
Really disagree that news outlets make it clear that they're talking about yoy inflation. You see headlines like "inflation hit x% in august" and then they're quoting the yearly numbers. If you don't already know that inflation is measured yearly that headline is completely misleading.

But the point of OP is that past inflation isn't what we should be worried about, future inflation is. Obviously the inflation we've had this year is unacceptable, but that doesn't mean inflation will continue to be unacceptable, and looking at recent monthly numbers is a better way to try to gauge future inflation than looking at yearly numbers.

ianai
The problem with a year out projection is there are many FOMC meetings and time for markets to move around in that time. Indeed, markets can react so harshly that the Fed stops seeing the inflation they're worried about and even may start to worry about deflation - though this definitely seems highly unlikely right now. You can see this happening in the monthly cycle of market valuations being down when the market finds out about market indicators then slightly up in later periods once the market corrects its overcorrection.

Ultimately modernity never saw a covid-19 before 2020 and is still in the post-reaction phase to it. 1918 happened in the midst of WWI and took several years to return to normalcy. (Notably, the 1920s were known as the "roaring 20s" until October 1929.)

I wish people would review all the history of the first half of the 1900s. There were multiple depressions in the 19-00s that helped create the conditions for WWI - which then created conditions for the 1918 pandemic - which then created conditions for the euphoric 1920s (and hyper inflation in Germany?) - which then created the conditions for the Great Depression and the rise of actual, violent fascism in USSR/Italy/Nazi Germany - which of course led to WWII and so on. (Notably that period of time is not exactly 'wonderful' for the USA.) and Spain had a violent civil war in there.

ianai
(to think there were many poor souls born in those early 1900s and died in WWII - never getting much of a chance to see much stability.)
cykros
The early 20th century history is definitely worth knowing about, and while they didn't have the orderly monetary stimulus backed by a central bank running the printing press at full speed, they did have the far less regulated fractional reserve lending systems that had a similar effect on money supply (no margin reserve requirements, banks and brokerages competing with each other for lower rates to indefinitely rehypothecate the same assets, etc). As the saying goes, history doesn't repeat, but it does rhyme, and those rhymes could certainly be useful to see coming.
ShroudedNight
> that's around $80,000 that might as well have been set on fire

Surely this should be 8k if using 100k as baseline

galdosdi
I'm quoting numbers from the BLS, no need to point me at the BLS.

The last two months of CPI were 0.2 and 0.4 respectively. (0.2 + 0.4) * 6 = 3.6, not 7. You accidentally put a factor of 2. (yes I know multiplying by 12 to go from month to year is an approximation, but it works well)

kotlin2
Food and energy have very high variance. The Fed uses core CPI, which excludes food and energy, as an important gauge of price changes. The data I quoted was the core CPI data (also from BLS). To use the non-core CPI numbers for the last two months is really cherry picking, especially with how much energy costs were down last month.
jdasdf
Because inflation has very high seasonality, and so it makes very little sense to compare it with a different season.

It's not "because it's a bigger number" or to "cause shock", it's simply because its a more consistent and useful way of measuring it.

former_student1
> Mainstream media has always been a little innumerate but this is a whole other level.

Listen dude, it's not the NYTimes's fault your 1 day options expire worthless and your leveraged ETFs went from +X P&L last December to -X P&L today.

purpleblue
No. The Core CPI should have gone down from the steep interest rate hikes. But they didn't and in fact it's still going up. That's huge. 0.4% MoM increase is 5% inflation annualized and that's just for the core. Other parts of the economy are inflating faster and that's a huge problem. The target is 2%. The Fed needs prices to drop and inflation to abate but it's not.
hellojesus
That's because the steep interest rate hikes aren't enough. Real rates are still negative.
trynumber9
Well it isn't decreasing. And 0.1% and 0.4% are still up. Combined with a GDP recession we have a bleak picture. For people who aren't overcompensated software engineers it is rather annoying combination.
spaceman_2020
Its a strange rant. If I had $0 two days ago, $1 yesterday, and $4 today, I would think my networth is going up, not down.