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What is REALLY Rising/Falling in Price: Items +/- 5.0

Posted By Barry Ritholtz On April 13, 2011 @ 12:00 pm In Consumer Spending,Inflation,Psychology | Comments Disabled

The link to John Melloy’s post [1] in our early reads [2] caused a bit of a stir. Sure John Williams is a bit controversial, but he has been hammering on the “Official Data Understates Inflation” for decades now.

Sometimes, it helps to shift your perspective ever so slightly to get a better view on things. The chart below, which only looks at price rises greater than +/- 5%, will do that. (Mad props to Invictus for the chart work)

It is clearly the high-frequency items – primarily food and fuel – are creating most of the angst (Household insurance at 8.5% is one of my peeves).

But we typically don’t buy motorcycles, major household appliances, computers, or televisions on a weekly or monthly basis, and they have been deflating hard. (See Hackonomics [3] take down of Hedonics as to why)

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YoY Changes in Price Index Categories (+/- 5%)

[4]
Data source BEA

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Note: We get fresh numbers Friday, so this is an early glimpse of where we are . . .


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2011/04/what-is-really-inflationdeflation-items-5/

URLs in this post:

[1] post: http://www.cnbc.com/id/42551209

[2] early reads: http://www.ritholtz.com/blog/2011/04/morning-reads-4/

[3] Hackonomics: http://www.ritholtz.com/blog/2008/02/hackonomics/

[4] Image: http://www.ritholtz.com/blog/wp-content/uploads/2011/04/5-percent-deinflation.png

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