July 2014 Consumer Price Index: Nothing To See Here, Move Along

Wednesday’s inflation report saw the CPI rising by 3.2% (log annual and monthly changes; 2000=100):

Price increases were almost wholly concentrated in food items (log annual and monthly changes; 2000=100):

Even here, price increases are moderating, although there’s been a pickup over the last couple of months. This is a seasonal pattern – it’s consistent across the whole of the past decade and more. Looking at the whole picture more broadly, it’s clear that price changes between months have returned to their normal range.

Put another way: the evidence is almost conclusive that the tax hikes and subsidy cuts in the last half of 2013 have raised the price level, but haven’t resulted in a permanent increase of inflation. Which also means that a lot of the discussion over “negative” real interest rates are a whole lot of bunk (of which I’ll have more to say on afterwards).

Technical Notes:

July 2014 Consumer Price Index report from the Department of Statistics