The BLS releases its CPI index for March
The headline inflation at 8.4% vs. Truflation at 13.4% for March 2022.
The Government CPI Inflation
Today at 8.30 am ET Bureau of Labor Statistics released their monthly ‘headline inflation’ calculated by the yearly % change in the Consumer Price Index (CPI).
The official CPI for March was 8.5% year-over-year (YoY) and higher than mainstream forecasts that put it at 8.3–8.4%. So the inflation remains the highest in 40 years and higher than 6% for the 6th consecutive month.
The month-over-month (MoM) CPI was 1.2% as opposed to a 0.8% increase last month.
The core CPI, which excludes volatile items like gasoline and food was 6.5% YoY. Core CPI is used as an indicator of underlying inflation drivers other than the most volatile price changes. The core CPI has also been the highest since the 80s.
The main factors of today’s CPI were reported as Gasoline, Shelter and Food, with significant price increases across multiple CPI categories and subcategories:
The Shelter category, which has a significant impact on the final CPI number thanks to its relative importance of ~33% stayed relatively low according to the BLS surveys. It is much lower than the widely quoted Case-Shiller home price index at 18.8% or rent increases reported between 10–50% across the country. Truflation’s Shelter data showed a moderate increase at 11.3% which was still much higher than the BLS data.
The BLS uses controversial Owners' Equivalent Rent in their calculations that doesn’t include mortgages or house prices and hasn’t been able to keep up with actual market rent prices either.
The Truflation Index March
Our independent inflation data based on millions of real market prices show that the CPI inflation for the end of March was 13.4% YoY, with the highest recorded rate this year at 13.9%, on the 7th of March 2022.
Since we operate on current daily price data, we already have insights into April inflation as well, currently at 13.5% as of the 12th of April, and driven primarily by Food 29.0% (YoY), and Transportation 23.7% (YoY) price increases.
The Truflation index is an independent daily US inflation index that calculates the CPI using prices data for millions of products instead of using the population sample surveys like the BLS.
We as so far substituted 60% of the BLS survey data with our real market price data and we are on our way to substituting their relative importance weights in May 2022.
Unlike the BLS, we do not incorporate vague hedonic adjustments. That’s because we have highly granular information of massive amounts of products at the point of purchase and in our opinion do not need to adjust for older items vanishing while new better quality items take their place. The product fluctuation will additionally help to better express current consumer trends alongside the data weighting.
Our most recent inflation data are available daily on our dashboard.
Inflation Insights
Yesterday evening, the White House warned the public that the inflation will be “extremely elevated”, blaming the inflation on high energy and gasoline prices deemed a “Putin Price Hike”.
To verify those claims, we looked into some independent gasoline data from the AAA Gas Prices, a widely-used, cross-American source for reporting gas prices at the pump, and from EIA.
The gasoline prices ‘at the pump’ increased by around 80 cents between the end of February and the end of March, according to EIA, and 63 cents according to AAA. The impact of gasoline on the CPI is very low at 3.8%. It means that at the current price increase of circa 18%, the gas impact on the overall CPI would be around 0.68%, which corresponds to some extent with the CPI March and a half April inflation increase we’ve seen.
The gasoline data released by the BLS and based on consumer surveys reported a price increase of 18.3% since last month and 48% since last year. Seeing its relative importance within the BLS basket, it seems the gasoline effects are understated in the CPI released by the BLS, likely due to some kind of adjustment.
The government plan to lower gas prices by releasing extra 1million oil barrels a day was announced only on the 31st of March, so it could not affect the prices and the CPI in March. In fact, the commodities prices started dropping mid-march, which had a limited effect of lowering the actual gas prices by ~10cents. In our April data, we’ve seen another ~5 cents drop in gas prices since March and we’re curious to see if the unprecedented oil release program will stabilize the market prices.
The price hikes in oil, gasoline, and related products started months ahead of the war in Ukraine but spiked recently after the US ban on Russian oil, which constitutes circa 8% of total US crude oil imports. Although the geopolitical situation with Russia exacerbated current price increases, the prices were hiking substantially since December and also mid-end last year, when the current administration also decided to release additional oil reserves.
