by Michael Snyder, The Economic Collapse Blog:
Inflation is going down! Let’s all celebrate! We all knew that when the Federal Reserve began aggressively hiking interest rates it would have an impact on inflation. Higher rates have caused a new housing crash, they have crushed the tech industry, and they have sparked the biggest wave of layoffs that we have seen since the Great Recession. We have entered a significant economic downturn, so it was inevitable that the annual rate of inflation would start to moderate. But as I will explain below, that doesn’t mean that inflation is now “under control”. The real rate of inflation is much higher than we are being told, and people all over the country are being absolutely crushed by the rising cost of living.
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Let’s start with the good news first. According to the Labor Department, the annual rate of inflation is rising at the slowest pace since October 2021…
Consumer prices increased 6.5% from a year earlier, down from 7.1% in November and a 40-year high of 9.1% in June, according to the Labor Department’s consumer price index, a measurement of what people pay for goods and services, which labor released on Thursday.
The rise last month marks the slowest annual gain since October 2021 and matches economists’ estimates.
Okay, but Fox Business has just reminded us that the annual rate of inflation “remains about three times higher than the pre-pandemic average”…
Still, inflation remains about three times higher than the pre-pandemic average, underscoring the persistent financial burden placed on millions of U.S. households by high prices.
So we are still definitely in a high inflation environment.
But let’s dig deeper.
Most Americans don’t realize that the way that the inflation rate is calculated has literally been changed more than two dozen times since 1980.
And every time it has been changed, the goal has been to make inflation appear to be lower than it actually is.
If the rate of inflation was still calculated the way that it was back in 1980, the real rate of inflation would be close to 15 percent right now.
That would be comparable to the peak inflation that we witnessed during the Jimmy Carter era.
So don’t let anyone try to convince you that inflation is “low” or “under control” or anything like that.
The main reason why the rate of inflation moderated somewhat during the month of December is because energy prices have been falling…
Americans saw some real reprieve last month in the form of lower energy costs, which fell 6.1% in December. Gas prices dropped 12.5% over the month, the biggest contributor to the overall headline decline in inflation in December.
That is great news, but it is already being projected that gas prices will rise significantly later this year.
And once war in the Middle East erupts, gas prices will go to heights that most people never even dreamed was possible.
Meanwhile, services inflation has just spiked to a level that we haven’t seen in decades.
The cost of living has become extremely oppressive, and the American people are becoming increasingly frustrated by this.
I would like to share a video with you that illustrates what I am talking about.
The woman in this video doesn’t understand all of the numbers that I have just shared in this article. All she knows is that when she goes to the grocery store, prices are way higher than they once were. This video contains some graphic language, and I apologize for that in advance. But I want you to see her anger, because this is how millions upon millions of Americans are feeling about inflation right now.
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