The Consumer Price Index (CPI) of so-called “sticky-priced” goods and services is calculated from a subset of the CPI where the price of goods and services change relatively infrequently. Since these prices are less volatile, they are thought to incorporate expectations about future inflation to a greater degree than prices that fluctuate wildly. One possible explanation for stickier prices could be the costs and risks that producers incur when changing them, so there is more care, thought, and reluctance in those considerations.
Examples of “sticky-priced” goods and services include wages, apartment rents, utilities, public transportation fares, insurance premiums, postal services, restaurant menus, textbooks, airline tickets, household goods, healthcare services, legal and professional services, gym memberships, childcare services, and subscription services.
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The Consumer Price Index (CPI) of so-called “sticky-priced” goods and services is calculated from a subset of the CPI where the price of goods and services change relatively infrequently. Since these prices are less volatile, they are thought to incorporate expectations about future inflation to a greater degree than prices that fluctuate wildly. One possible explanation for stickier prices could be the costs and risks that producers incur when changing them, so there is more care, thought, and reluctance in those considerations.
Examples of “sticky-priced” goods and services include wages, apartment rents, utilities, public transportation fares, insurance premiums, postal services, restaurant menus, textbooks, airline tickets, household goods, healthcare services, legal and professional services, gym memberships, childcare services, and subscription services.
Data source:
[https://fred.stlouisfed.org/series/CORESTICKM159SFRBATL#0](https://fred.stlouisfed.org/series/CORESTICKM159SFRBATL#0)
Data, Percent Change from Year Ago, Seasonally Adjusted:
[https://docs.google.com/spreadsheets/d/15zjJDRzhgqWmFNXJ8E6frnU24ZDM3-iOBedSzynSg6U/edit?usp=sharing](https://docs.google.com/spreadsheets/d/15zjJDRzhgqWmFNXJ8E6frnU24ZDM3-iOBedSzynSg6U/edit?usp=sharing)
Methodology: Data organized in R, plotted via ggplot, and annotated in Adobe Illustrator.
Does this mean if it was 5% inflation a year ago, and 3% this year, this would show -2% for this year?
This is a well understood statistical “anomaly” resulting from base effects:
https://www.investopedia.com/terms/b/base-effect.asp