For everyone who thinks that we should view commodity prices as the right measure of inflation: they’re very, very volatile. Here’s the annual rate of change in the IMF commodity index over time:
IMF So, were all the people screaming about inflation now screaming about deflation a year and half ago? Why not? In terms of level, by the way, the recovery in commodity prices has now brought the overall index about back to where it was in December 2007.
And for those who insist that we need to look at inflation in stuff like gasoline, bread, and milk: well, the BLS has convenient average price data, so let’s compare some of those prices to what they were, say, three years ago, when Bush was in the White House and all was well with the world. Over those three years, the price of gasoline has soared by … well, actually gasoline is a bit cheaper now than three years ago. OK, but milk … actually, milk prices are down substantially since three years ago. But it’s true: bread has gone up in price.
Again, I don’t remember people making a big fuss about the deflationary meaning of falling gasoline and milk prices.
IMF And for those who insist that we need to look at inflation in stuff like gasoline, bread, and milk: well, the BLS has convenient average price data, so let’s compare some of those prices to what they were, say, three years ago, when Bush was in the White House and all was well with the world. Over those three years, the price of gasoline has soared by … well, actually gasoline is a bit cheaper now than three years ago. OK, but milk … actually, milk prices are down substantially since three years ago. But it’s true: bread has gone up in price.
Again, I don’t remember people making a big fuss about the deflationary meaning of falling gasoline and milk prices.
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