CPI for December 2009

The Consumer Price Index is out for December 2009 with an increase of 0.1% from last month and for the year, we have an overall increase of 2.7%.

This month it's used cars which have the price rise of 2.5%. Not surprising since cash for clunkers has now worn off. Travel increased too, airfare alone went up 2.4% in a month. Guess all of those naked screeners are spendy (a joke, it is assuredly fuel costs).

But recall how some food commodities are expected to go sky high in 2010, this report may be showing the first signs, with food increasing 0.2%. This month's 0.2% is the largest increase in a year. Energy also rose another 0.2% but this is the smallest increase in 5 months.

The cost to gas up your car has increased 53.5% in a year. If you heat your house with gas, you're in luck, the yearly price has dropped 18.1%. The question is does this actually translate to the massive drop in gas futures?

Smokers are getting hammered with a 30.1% increase in tobacco prices.

Below is the CPI for this recession period until present. One can see there was a deflationary cliff which occurred, which also looks to be long over.


Here's Food and take a nice long look for in a year from now, these prices will be a pleasant memory.


Here's energy for the start of the recession until present, and the variance is unreal, how can this possibly be just supply & demand?


Here is everything else, sans food and energy. As one can see, there would be no real deflationary spiral without energy included for this recession start time until present.


Finally here is the University of Michigan inflation expectation, where this month consumers believe it will increase 2.8% in 2010:

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Real earnings fall - 2008 vs. 2009

December 2008 to 2009:

Real average hourly earnings fell 1.3 percent, seasonally adjusted, from December 2008 to December 2009. A 0.3 percent decline in average weekly hours combined with the decrease in real average hourly earnings resulted in a 1.6 percent decrease in real average weekly earnings during this period

They were flat from November to December 2009

RebelCapitalist.com - Financial Information for the Rest of Us.

there are a host of EI released today

which is strange since it's Friday, but if you can write some up, I think that would be great. This one was major. There is also MI consumer index, a bunch of stuff going on with bonuses and so on
and then Ind. Prod./Capacity...which is the one I plan to get to myself. (FYI)_

but yeah, of the people left with any sort of job, they get even further squeezed. Nice contrast with those executive bonuses to be sure.

Robert Oak on the CPI for Dec., 2009

In light of all the controversy about the lack of Social Security COLA for 2010, which is based the CPI, I am confused about which CPI (all items, or with certain things excluded?) the SS COLA formula is based on. Can Mr. Oak shed light on this? Many seniors are outraged, claiming their costs have continued to rise. (I am a senior, but not an outraged one.) Of course, part of the outrage is based on ignorance (people think Congress and/or Obama specifically took action to deprive them of the COLA) and part of it is based on an entitlement mentality (once used to an annual COLA, people think of it as a "right" and feel they have been "screwed"). Even setting aside all the irrationality, there are certain factual issues such as the one I raised above that I hope Mr. Oak can clarify.

Welcome to EP Ray Joiner

I'd claim they are right, that prices have risen since CPI (as one can see, the deflationary time period is obviously affected by oil, almost exclusively).

It appears COLA (and I'm still looking for the exact formula, nice that they hide it!) it correlated to CPI-W, but it's not broken down by elements at all.

Now CPI-W isn't quite the same as CPI, it's Urban Wage Earners and Clerical Workers.

It's also Q3 of a year compared against Q3 of the past year, to project the next year. Now that seems kind of not valid considering there is enormous evidence of a speculative bubble on energy, specifically oil in 2008, which gives an artificial deflationary value.

Ok, the CPI-W for 2009 was...(drum roll please), 3.4%.
Gets better. Guess what so far I cannot find either the raw data or the break down, or even a graph of? CPI-W (vs. the above which is CPI-U).

Here is table 6 from the above report, which is some CPI-W data here.

So, here is the CPI-W per quarter and note it's only the Q3 used (now why dump out 75% of the index is another very good question?)

Now this makes zero sense to me, intuitively. Why use just 25% of a price index instead of yearly averages? Esp. in today's derivatives, speculative trading, commodities gone wild world? (in other words, one month might have deflation due to increased volatility, but for a period of a year or two actually be inflationary).

So, here we have a 3.4% yearly increase, yet, Q3 2009 against Q3 2008 gives drop of 3.504, which amounts to a 2.1% decrease, i.e. as I understand this, implies no COLA increase for 2010. Now how can one have a yearly 3.4% increase in CPI-W, yet because one is comparing just Q3's, not get a COLA (it's against the law to reduce payments regardless of deflation, which also makes not a lot of sense really)....

yeah, well, those Seniors man, get righteous because I think you're onto something here. It sure seems like some skewed calculations that need to be revised on first glance pass to me.

This is what I've got so far, but I'll try to hunt around for more info on CPI-W. I wasn't paying much attention but this affects all sorts of adjustments from Medicaid, to Medicare to SS to military pay, so I'll start trying to ferret.

Also, I'm the geek squad of the site so your account is activated and hope you comment more for this was something I personally was oblivious to until your comment.

AARP article discusses this same issue

Ray Joiner On www.aarp.com there is an article about the CPI-W and how it is a poor measure to base a Social Security COLA (or lack of one) on. Click on Bulletin Today near the top and look for a title along these lines. Seems to have been posted today (1-28).

Ray Joiner

ah, now i understand

you're trying to understand how social security and other programs are getting royally screwed without making it to the headlines.

A huge one is stripping away traditional pensions and replacing them with 401ks, which is well documented to have lost billions, from dot on to 2008.