Yesterday morning, the U.S. Bureau of Labor Statistics (in the Department of Labor) issued their latest monthly report on the Consumer Price Index. The first online Wall Street Journal covering the story was headlined “U.S. inflation reached 30-year high in October.” The first two sentences in that story were:
U.S. inflation hit a three-decade high in October—rising at a 6.2% annual rate—as pandemic-related supply shortages and continued strength in consumer demand continued to push up prices. The Labor Department said the consumer-price index, which measures what consumers pay for goods and services, increased at the fastest annual pace since 1990.
My “Morning Call” newsletter included this story right after it came out, and noted:
The first two sentences in this article a) assume the CPI is inflation, and b) blame consumers and pandemics, not government policy, for inflation. TIPS – “Treasury Inflation-Protected Securities” protect investors not from inflation, directly, but the CPI – a government statistic that is subject to ambiguity and discretion.
I was showing this story to my finance students at Loyola U. Chicago in the early afternoon yesterday, but the WSJ story no longer included those two sentences. They had been “updated.” Today’s hard-copy WSJ features the story at the top of the front page, in a story headlined “Inflation Rate of 6.2% Marks a 31-Year High.” The first sentence in that story (online version here) now reads as follows:
U.S. inflation hit a three-decade high in October, delivering widespread and sizable price increases to households for everything from groceries to cars due to persistent supply shortages and strong consumer demand.
So consumers are now viewed closer to how they should be – the consumers of inflation as well as goods and services. Inflation is quite arguably a regressive tax, at odds with the Biden administration’s claims that it would only raise taxes on rich people. But the WSJ is still identifying ‘persistent supply shortages’ and ‘strong consumer demand,’ not fiscal and monetary policy, for inflation.