Consumer Price Index for All Urban Consumers: All Items in U.S. City AverageFRED
Description
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It was May 30th, 2021, that I published my first analysis of accelerated inflation and explain the basics in that article:
It is important to know that CPI passed above the +2 stdev in April 2021 for the first time in the past 12years.
In September 2021 Inflation just passed the +4stdev ..!
A little statistics:
In statistics, the standard deviation is a measure of the amount of variation or dispersion of a set of values. A low standard deviation indicates that the values tend to be close to the mean of the set, while a high standard deviation indicates that the values are spread out over a wider range.
If you are checking the rate of change in the past 12 months, it is 5.38%, which is much higher than September 2011 the highest reading in the past decade with 3.81% ..! (5.38/3.81=1.41=> 41% higher)
This becomes more interesting if you check the rate of change in the past 16 months: 7.11% exponential Inflation in a 16 months period which has not been seen in the past 3 decades!
For a 12 months period, it is 5.38% is the highest in the past decade! and the 3rd highest in the past 4 decades!
In the past 4, the rate of change does not show any decrease!
Now let's review the real causes of Inflation:
Milton Friedman: “Inflation is always and everywhere a monetary phenomenon".
Increased government spending is good for the economy, but it can lead to scarcity in some goods and inflation will follow. Everyone knows this administration is willing to spend more to achieve a higher employment rate and GDP, which means more inflation!
We also experiencing Demand-pull inflation, when demand surpasses supply, higher prices are the result. This is demand-pull inflation. Demand-pull inflation is the upward pressure on prices that follows a shortage in supply, a condition that economists describe as "too many dollars chasing too few goods."
A Broken supply chain in time of high demand: U.S. supply chains have suffered major damage due to the combined factors of the coronavirus pandemic, short-term corporate planning, and underinvestment in logistics, a new report from S&P Global Research found.
To wrap it up: I am not an economist and I can not find any evidence for a lower inflation rate in the next few months, but I have found many to support a higher inflation rate for the next few months!
I strongly believe anyone who talks about "Deflation" at this moment is either a fool or tries to fools others..!
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Moshkelgosha
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@Nico.Muselle, Thank you so much, TradingView is amazing..!
Thoff99
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Let's go Brandon!
friedfinance
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I knew you were not an economist or a good one when you said "everyone knows government spending is good for the economy". The money spend by government is taken from someone else, you destroy the economy somewhere to pump somewhere else.
KISS_Principle
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@friedfinance uhh no it's just created from thin air
lucasdiaz9
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Not sure if understand correctly but Isn’t t deflation what would comes as consequence of inflation? Basically, as the economy reopens there are businesses that arent able to keep up with the sudden demand and as businesses try to catch up that sudden demand goes somewhere else or it just disappears and businesses have to start selling products at a loss.
Instructions unclear, bought more BTC.. =D Jokes aside, thank you for this analysis on inflation. This is a genuine fortune cookie!
portosantostefano
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I always love to learn.Your post was very clear and helpful. Thank you.
afrocano
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Inflation is the expansion of the money supply the price increase are relatively a byproduct of the increased money supply, multiple examples in the past has been examples and I will use 1818 as an example when early American colonies hyper printed notes irredeemable in specie (gold/silver) with the subsequent increase in notes the wholesale index rose about 47.8 annum in some colonies while others with considerably more notes seen wholesale index prices rise by 87.1% annum , which was caused by the increased supply of currency, henceforth the cause of this inflation is more a factor a response to covid Increase demand while supply was stagnant, the supply chain is a small factor which the big culprit is the central banks printing of currency across the globe
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