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Posts tagged with: "CUUR0000SETA01"

View this series on FRED

Is inflation running hot or cold?

One popular measure of the price level is the consumer price index (CPI), which measures the average change over time in the prices paid by urban consumers for a market basket of goods and services. This index can be broken down into smaller component indexes, each representing a different subset of goods and services. So changes in the aggregate price level can be traced back to changes in the price levels of the underlying components. As described in a recent Economic Synopses essay, we have developed a “heat map” that visually represents CPI data in FRED: specifically, the relative inflation levels of various CPI components over the past 10 years. The heat map shown here lists the components in order according to their weight in the overall index as of July 17, 2015.

2015 July 20 FRED Blog post heat map x800

How this heat map was created: We used the FRED Add-In for Microsoft Excel (view instructions for installing the Add-In here) to download the FRED data: year-over-year percent change in each CPI component index over the past 10 years. We normalized each value by subtracting the series mean and dividing by its standard deviation calculated over the past 10 years to take into account differences in long-term trends and volatility across series. Each colored box in the heat map corresponds to the normalized inflation value for a given CPI component for a particular month. Blue represents an inflation value below the long-term trend of the index, and red represents an inflation value above the long-term trend. The darker the color, the greater the difference between that particular inflation value and the long-run average for the component index in terms of standard deviations.

Because we’re comparing series against their long-run averages, it’s possible for a “blue” series to have a higher inflation rate than a “red” series. For example, for June 2015, owners’ equivalent rent is red, with an inflation value of 2.95 percent; water, sewer, and trash is blue, and yet has a higher inflation value of 4.65 percent. The reason is that the June 2015 owners’ equivalent rent inflation is above its 10-year average of 2.16 percent; and the June 2015 water, sewer, and trash inflation is below its 10-year average of 5.11 percent.

Suggested by Joseph T. McGillicuddy and Lowell R. Ricketts.

View on FRED, series used in this post: CPIAPPNS, CPIAUCNS, CPIEDUNS, CPIENGNS, CPILFENS, CPIRECNS, CPIUFDNS, CUUR0000SAF116, CUUR0000SAG1, CUUR0000SAH3, CUUR0000SAM1, CUUR0000SAM2, CUUR0000SAS4, CUUR0000SEGA, CUUR0000SEHA, CUUR0000SEHB, CUUR0000SEHC, CUUR0000SEHG, CUUR0000SETA01, CUUR0000SETA02

More prices that deviate from the CPI

We recently discussed some CPI categories that do not tend to have rising prices. Those examples were all linked to information technology. Here’s a wide variety of categories where prices can decrease or remain stable for long periods. For example, coffee is subject to wide fluctuations, including steep price drops. Apparel became disconnected from the CPI sometime in the early 1990s and remains largely constant. It is more surprising that cosmetics and musical instruments are also consistently below general inflation or even flat. In the motor vehicles category, some quality improvements only partially affect the overall price of motor vehicles; this is another example, much like computers, of a category that does not closely follow the overall path of the CPI.

How this graph was created: Start with the graph for the CPI, then add the other series. Change the color of the CPI line to black and thicken it to distinguish it from the many other series.

Suggested by Christian Zimmermann

View on FRED, series used in this post: CPIAPPSL, CPIAUCSL, CUSR0000SERE03, CUUR0000SEFP01, CUUR0000SEGB02, CUUR0000SETA01


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