According to the United States Bureau of Labor Statistics (BLS), inflation has risen 8.3% from last year April 2021. March 2022 reported an 8.5% annual inflation increase, which has prompted some in the media to view the marginal decrease as an indicator that inflation is cooling down. However, that might not tell the full story.
The Consumer Price Index (CPI) is the measure of inflation that major media outlets often use, and shows that many categories of prices have increased, but saw a sharp decrease of 6.1% for the price of gasoline. This unusually large spike in the price for gasoline was largely fueled by the invasion of Ukraine by Russia, and thus carried March 2022’s inflation higher.
Seeing a return to a lower 8.3% for April may in fact give a better picture of the of reality domestic reasons for inflation, such as the increase of the money supply. In fact, if we look at the breakdown of price changes from March and April 2022, we see that All Items Less Food and Energy actually increased 0.3%. In other words, when we account for the price of fuel due to the conflict between Russia and Ukraine, are we really seeing an inflation decrease?