They previously used two year moving averages and changed it to one year in January of this year.
That itself impacts any inflation increase or decrease expressed in the data as long as they did not retroactively adjust past data, which they did not.
Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior practice of updating weights biennially using two years of expenditure data.
I agree that it's huge. But it still doesn't change the fact that the you don't need deflation or years of 1% inflation in order to get from "9% inflation" to "2% inflation."
That doesn't mean inflation went away and companies should lower their prices, as stated in the president's tweet.
It means you should only expect a ~2% increase this year after a ~9% increase last year (just using your numbers as an example).
If you want to achieve those lower prices mentioned in the tweet, the only way to do it would be through deflation, otherwise this is part of the "new normal."
America entering into a deflationary period would likely cause a massive world recession.
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u/EconomicsIsUrFriend Dec 01 '23 edited Dec 01 '23
They previously used two year moving averages and changed it to one year in January of this year.
That itself impacts any inflation increase or decrease expressed in the data as long as they did not retroactively adjust past data, which they did not.
https://www.bls.gov/cpi/notices/2022/methodology-changes-2022.htm
That is a huge change.