http://news.medill.northwestern.edu/chicago/news.aspx?id=221593 Similarly, David Breuhan, vice president and portfolio manager at
Gregory J. Schwartz & Co. Inc., distinguishes between CPI inflation and
“pocketbook inflation,” he said in an interview. “You can exclude it on
paper, but it doesn’t mean you can exclude it in the household.”
Consumer Price Index falls on gas decline,
sparks deflation concerns
BY JORDAN MONROE SCHULTZ
MAY 16, 2013
Sparking concern over possible deflation,
the national Consumer Price Index
decreased 0.4 percent in April from March,
while the Chicago-area CPI remained
unchanged. The index is seen as an indicator
of inflation.
The U.S. Bureau of Labor Statistics reported
Thursday a seasonally adjusted 0.4 percent
decrease nationally in April while the
unadjusted local index did not change. The
national decline was fueled primarily by
lower gasoline prices, which contributed to a
total 4.3 percent decrease in the energy
index. The food index rose only slightly: 0.2
percent.
Diane Swonk, chief economist at Mesirow
Financial Holdings Inc., expressed concern
over CPI’s prominence in indicating
inflation. In a blog post, she wrote that the
personal consumption expenditure deflator,
which, unlike CPI, weights consumer
spending shifts across sectors and includes
more services, more accurately
demonstrates prices that consumers actually
pay.
Reported previously by the U.S. Bureau of
Economic Analysis, the PCE deflator
declined 0.1 percent in March from
February.
“No matter how the price data is cut, all
indicators of inflation show a disturbing
trend toward decelerating price inflation,”
Swonk wrote online. “Moreover, all price
measures suggest we are getting dangerously
close to losing any buffer zone on inflation,
which is extremely costly.”
Brian Wesbury, chief economist at First
Trust Portfolios LP, and Bob Stein, deputy
chief economist, also believe the PCE
deflator is running low. They, however,
expect an upcoming rise in inflation, they
wrote in a blog post. “We don’t expect this to
last. Inflation is bottoming out right now
and will be noticeably higher a year from
now.”
The national CPI for all products, excluding
the volatile food and energy, grew 0.1
percent in April.
Locally, energy and food prices fell 1.1
percent and 0.9 percent respectively.
Education and communication prices also
decreased, while apparel, shelter and
household furnishings and operations prices
primarily offset any downward pressure. The
local index less food and energy grew 0.4
percent over the month.
“Separately, it is extremely important to
delineate between inflation or the change in
price levels and actual prices. Gasoline
prices remain elevated, for instance, despite
recent declines,” Swonk wrote.
Similarly, David Breuhan, vice president and
portfolio manager at Gregory J. Schwartz &
Co. Inc., distinguishes between CPI inflation
and “pocketbook inflation,” he said in an
interview. “You can exclude it on paper, but
it doesn’t mean you can exclude it in the
household.”
The Chicago-Gary-Kenosha region
comprises 16 counties with a total
population of 9.7 million as of 2010.
Over the past 12 months, the national allitems index grew 1.1 percent, the smallest
12-month increase since November 2010.
Less food and energy, the index increased
1.7 percent.
The Chicago-area all items index grew 0.9
percent; excluding food and energy it rose
1.6 percent over the year.