Updated Seasonal Factors Remove Much of the Volatility from 2011 Monthly CPI Data

2011 was a roller coaster ride for U.S. consumer price inflation—or was it? If you went by the releases from the Bureau of Labor Statistics, monthly CPI inflation, stated as annual rates, bounced from over 6 percent in February, down to under -2 percent by June, and then back up over 6 percent in July. That made life hard for policy makers, forecasters, and anyone trying to use the CPI to index payments.

It turns out, though, that inflation was not so volatile after all. As part of yesterday’s CPI report for January, the BLS released revised seasonal adjustment factors. When we apply the new adjustment factors to data for the last two years, much of the month-to-month variation in inflation disappears. >>>Read More