Tags: Inflation | Near | 10 | percent | Using | Older | Measure

Inflation Nears 10 Percent Under Old Methodology

Wednesday, 13 Apr 2011 09:54 AM

The Consumer Price Index, otherwise known as the inflation rate, hit 9.6 percent in February if pre-1980 methodology were used today, according to the Shadow Government Statistics newsletter.

Officially, the unadjusted 12-month inflation rate ending in February hit 2.1 percent.

Former Fed Chairman Paul Volcker tweaked the methodology in order to account for things such as product replacements and improvements to technology and their effects on prices.

volcker200gtty-(1).jpg
Former Federal Reserve Chairman Paul Volcker
(Getty photo)
"Near-term circumstances generally have continued to deteriorate," says Shadow Government Statistics creator John Williams, according to CNBC.

"Though not yet commonly recognized, there is both an intensifying double-dip recession and a rapidly escalating inflation problem. Until such time as financial-market expectations catch up with underlying reality, reporting generally will continue to show higher-than-expected inflation and weaker-than-expected economic results in the month and months ahead."

Analysts are expecting March's inflation rate to come in around 2.6 percent.

Federal Reserve officials, however, say they aren't worried about overall inflation rates climbing on the coattails of high oil and food prices.

Federal Reserve Vice Chairman Janet Yellen has said rising food and fuel costs will have only a temporary impact on inflation and consumer spending and warrants no reversal of record monetary stimulus.

"The surge in commodity prices over the past year appears to be largely attributable to a combination of rising global demand and disruptions in global supply," Yellen says, according to Bloomberg.

"These developments seem unlikely to have persistent effects on consumer inflation or to derail the economic recovery and hence do not, in my view, warrant any substantial shift in the stance of monetary policy."

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The Consumer Price Index, otherwise known as the inflation rate, hit 9.6 percent in February if pre-1980 methodology were used today, according to the Shadow Government Statistics newsletter. Officially, the unadjusted 12-month inflation rate ending in February hit 2.1...
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Wednesday, 13 Apr 2011 09:54 AM
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