Inflation Down On Drop In Gas Prices????

May 14, 2008 at 11:31 am  ·  Category: Humor, Inflation, Market Commentary

Using an overly aggressive seasonal adjustment factor, the statistical magicians turned an actual 6.5% surge in gasoline prices into a small decline. I wonder if they can read the minds of very skeptical American motorists who are not fooled by this statistical sleight of hand! And like any good magician, the statisticians will make higher gasoline prices reappear with a vengeance over the summer months as the statistical magic trick runs in reverse making reported gasoline prices magically increase while prices at the pump decrease. [bold and italics added]


Stocks are rallying today on an April CPI report which was tamer than expected.  According to the report, prices inceased .2%, seasonally adjusted, from March to April and the core, which excludes food and energy, increased 1%.

“Seasonally adjusted” seems to be the key word as a 5.6% real increase in gas prices was seasonally adjusted into a 2.0% decline.  The idea here is that gas prices usually increase 7.6% in April and so the 5.6% increase is actually less than expected.

For those of us concerned with actual reality, I wouldn’t pay too much attention to this report.  But what’s reality got to do with it?

Posted by Greg Feirman  ·  Trackback URL  ·  Link