Monthly Update on 2-Year Inflation
For more than a year now I have been tracking a quick and dirty 2-year inflation total as a way of determining if inflation is going up or down. Now, I know some purists will say that this is not technically accurate as I am combining the monthly rates from 2 years. This is, however, a quick back of the envelope method to see where we are from the consumer perspective. Here is what happened this month.
It is good news that the monthly inflation fell to 5% in March. As shown in the chart above, when added to the last year rate of 8.5%, we get a combined total of 13.5%. As you can see from the chart, that is roughly the average 2-year rate reflected for each of the last 11 months (13.7%). This means that although this year's monthly inflation is decreasing, its not doing so at a rate great enough to account for the peak inflation that occurred last year.
The reason I beat this drum is that we have not yet turned the corner on the peak months of 2022, which were May, June and July. That implies that over the next several months inflation must fall at or below 4.4% just to maintain the 2-year average of 13.5%. So generally speaking (again, it varies a good bit in the details) consumers are looking at about a 13.7% increase in the base cost of living over the last 2 years. Watch out because gas prices are about to spike, with oil up 2.2% a barrel at the writing of this post.