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adebar t1_ixab9x9 wrote

The technical term for what you are trying to show is the [YoY (year-on-year) CPI inflation](https://www.investing.com/economic-calendar/cpi-733). This peaked at 9.1% in July 2022. It was never anywhere near 20%.

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FuckMyHeart OP t1_ixact1c wrote

The graph shows the change in cents, not as a percentage. That's 20¢ not 20%. Inflation is almost always shows as a percentage, but I thought it would be more meaningful to the average person to display the data as the change in a more tangible medium.

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adebar t1_ixad5uy wrote

OK, one dollar became 9.1 cents less valuable year-on-year from July 2021 to July 2022. There was no 1-year period in 2022, where one dollar became worth 20 cents less.

If you don't believe me, please tell me during which one-year period the value decreased by 20 cents.

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FuckMyHeart OP t1_ixaevyx wrote

Maybe I'm not good at explaining what the graph is supposed to represent.

$1 in 1989 is worth $2.19 in 2021

whereas, $1 in 1989 is worth $2.40 in 2022

That's a 21¢ increase over the previous year.

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adebar t1_ixafmrq wrote

OK, I see what you are getting at. But consider this: your 2021 money is devaluing by 21 cents on a $2.19 basis. This is a relative (~9%; there are significant rounding errors) devaluation by approximately 9%. It's meaningless to look at absolute devaluation if the basis is changing from $1 to $2.19 from 1989 to 2021. You are comparing 1989 apples to 2021 oranges. What you want to look at is year-on-year percentage changes, those are on a relative (previous-year power of purchasing) basis.

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FuckMyHeart OP t1_ixafros wrote

I just thought it was interesting

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adebar t1_ixag63i wrote

Yes, and kudos for having the grit to finish your chart and the guts to post it here. You will have a more meaningful understanding if you think about inflation/purchasing power changes in relative terms. Your 1960s dollars probably devalued by 50 cents in the last year. :-)

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tayl0559 t1_ixahhph wrote

maybe dont be so condescending. youre wanting the graph to be something that its not trying to be, if anything youre the one comparing apples to oranges here

also, the graph would look exactly the same if it was using 1960s dollars instead of 1990, only difference would be the y axis numbers would be bigger

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adebar t1_ixaibj2 wrote

Look, there's a fair amount of established economic theory around inflation, how the numbers are usually presented and what they mean.

It's highly misleading to say that a dollar devalued by 20 cents in 2022 because precisely only a 1989 dollar devalued 20 cents. A 2021 dollar devalued 9 cents and a 1960 dollar probably devalued 50 cents. See how bothersome this is? That's why people refer to the changes in per cent and not absolute terms.

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Beliyat_Baron t1_ixcnmtc wrote

The only one being misleading here is you. When you talk about "established economic theory", be sure to include the caveat that it's the model you agree with. There are countless other ones.

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adebar t1_ixcottu wrote

Alright, then please point me to one central bank or data vendor that quotes CPI changes not as per cent but in index points.

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Beliyat_Baron t1_ixcq2en wrote

sigh. If your argument is to use something that by definition reports a rate, obviously it will be in a rate. Again, misleading. OP isn't reporting a CPI, and if you can't recognize that then honestly I'm not surprised.

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adebar t1_ixcqjk2 wrote

Sure, she is reporting a CPI. It even says so in the graphic. And thank you for agreeing that quoting rates of change in per cent is more common.

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Beliyat_Baron t1_ixcsmii wrote

You're not getting it, let's try a different avenue.

A percent change, by definition, requires two data points: a before and an after. A Ruble and a Yen may undergo the same inflation rate (percent change) but still retain vastly different values (relative to each other).

Do you acknowledge that an inflation rate as a percentage is meaningless without access to the raw values? That's what OP is trying to do: construct, in some way, the raw values.

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adebar t1_ixcukox wrote

I'm getting it more than you realise. The index values (that's the technical term) are in fact totally arbitrary. All the information is in the relative changes. Once you have those, you can arbitrarily rebase. In fact the indices are regularly rebased (current one has 1982-84 = 100). There are series with other bases which are still published by the BLS because other bases are referenced in contracts.

Every announcement of CPI quotes the changes in percentage points. Take the BLS word for it, not mine: "Calculating Index Changes: Movements of the indexes from 1 month to another are usually expressed as percent changes rather than changes in index points, because index point changes are affected by the level of the index in relation to its base period, while percent changes are not."

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Beliyat_Baron t1_ixcvuwk wrote

Here was my question. Nowhere in your comment do I see a direct (or indirect) answer to this

>Do you acknowledge that an inflation rate as a percentage is meaningless without access to the raw values?

I'm going to assume your answer is "no". If a Ruble and a Yen undergo the same inflation, how do you explain them having different values? Or do you think two currencies that undergo the same inflation rate have the same values?

It's funny you quoted the BLS, because if you pay closer attention to it, you'll see it's saying the same thing I am to you.

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adebar t1_ixcwi6e wrote

How often does the BLS quote changes in inflation in percent and how often in index points in that article?

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[deleted] t1_ixazmsu wrote

It's a very unorthodox way of representing this dataset. What value is added by this metric?

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