Why Don’t Americans Believe Inflation Is Coming Down? Because (Most) Prices Aren’t

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To an economist looking at the government CPI report that came out Tuesday, it is clear that inflation is receding. Over the past 12 months, the overall CPI is up 3.2%, far below the peak annual rate of 9.1% seen in the summer of 2022.  The co-called “core” rate, which excludes  volatile food and energy prices, was up 4%, down from a peak annual rate of 6.5%.

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That is all well and good.  But consider this chart, showing the changes in the overall CPI, the core CPI, and two other indexes, one excluding shelter from the core index, and the other also taking out used car and truck prices.

Cumulative Inflation looks better if we take out the volatile stuff, not only food and energy but also shelter and even used car and truck prices.  But all those indexes are up substantially since the end of 2019 – a few months before the Pandemic hit – and all are at their peaks.

Some indexes are considerably below their Pandemic peaks.  Whether or not that makes you feel good may depend on when you start counting.

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