Inflation! uh and Girls!

I have no idea how to make an inflation headline sexy. But my favorite inflation headline scold is going crazy so you will be subjected to his rant. Expect a bunch of crazy headlines about inflation over the next few days/months. They may be politically motivated or just naïve, but they are likely to be wrong.

Inflation numbers generally take the CPI (Consumer Price Index) from this month compared to a year ago. That is generally sensible. But what was going on a year ago? Perhaps the entire economy shutting down due to a pandemic? Might that skew the numbers? Will anyone mention that?

Note the chart below (annotations via Kevin Drum). Click the link above if you want the actual math, but it’s pretty clear that if you compare this year’s May/June/July/August numbers with last year, you’ll get an inflation rate that is out of whack (lies, damn lies, and statistics).

Sorry, no actual girls in this post.