The Deceptive Nature of Inflation's Headline Numbers.

Headline inflation numbers can be misleading, and it's important to dig into more detailed numbers to understand what's really going on. By annualizing the 10-month number of the Consumer Price Index, the current inflation rate is closer to 3.4% rather than the headline 4.9%. Similarly, the Personal Consumption Expenditures numbers, which the Federal Reserve uses to measure inflation, show a nine-month total increase of only 2.3% if you start counting in July, which annualizes to just over 3%. While inflation is still higher than before, these numbers suggest that it has fallen sharply in the past 9-10 months.