December 2019 headline CPI came in at 2.29% this morning, with a seasonally-adjusted drop from Nov 2019 coming in at -0.1%. This was based on a gas price YoY delta of +7.9%, well below the EIA’s own calculation of +9.10%. Had 9.10% been used, headline CPI would have printed at over 2.5% and MoM would have printed a positive 0.1%-0.2%.
Seasonally adjusted, there’s nothing to worry about. Without the adjustments, however, we see that rising oil and gas prices are once again papering over the deflation that the current BLS goal-seeking reporting methodology would otherwise report. Had we seen another 10% YoY drop instead of a 9.1% rise in gas prices, headline CPI would have come in at a lethargic 1.6%.
Without the BLS’s methodology, of course, inflation remains very much a problem. The chart below, courtesy of ShadowStats.com, shows what CPI would be if the methodology hadn’t been changed numerous times over the years.
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