The Excel plot, using fake data at a constant inflation rate, matches surprisingly well the FRED data series CPILFESL:
My fake data for the monthly inflation (thick blue line) was a constant 0.165% per month rate of inflation; this number gives a "percent change from year ago" of 2%. I went for 2% because that number was the Fed's inflation target.
Interruptions to the constant 0.165% rate occur ONLY at the low during the recession and at the high that occurred a year later. This data gives the thick blue line, the percent change from the month before. That same data also generates a price index series, which I used to figure the percent change from year ago inflation.
It amazes me that so little is needed to essentially duplicate the US inflation history of the past couple years: two interruptions to the target rate, and the "from year ago" calculation. Nothing else.
Month 7 is January 2019
Month 51 is September 2022
The red and blue lines with dots are from the FRED graph
The recession bar (Feb 2020 to Apr 2020) is from the FRED graph
The thick orange and blue lines were generated by Excel for a constant monthly inflation rate interrupted only at months 21-23 and 34-36 where the FRED data values were used.
The plot window from the FRED graph was used as a background image for the Excel plot window.
This post is third in a series on inflation.
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