Fact Check: AP Claims Inflation Fell in August

Claim: The Associated Press reported on Tuesday morning that “U.S. inflation falls for 2nd straight month.”

Sharply lower prices for gas and cheaper used cars slowed U.S. inflation in August for a second straight month. But many other items rose in price, indicating that inflation remains a heavy burden for American households. https://t.co/UWnYoy6AK5

— The Associated Press (@AP) September 13, 2022

Verdict: Misleading.

The Bureau of Labor Statistics said on Tuesday that consumer prices rose three-tenths of a percentage point in August. That represents an acceleration of inflation compared with July, when the month-to-month figure was unchanged compared with the prior month.
On a year-over-year basis, the Consumer Price Index was up 8.3 percent. This was more than the 8.1 percent annual gain forecast by economists. It was down compared with a month earlier, when the CPI had a year-over-year gain of 8.5 percent.

Many leading financial journalists and economists, expecting a decline in the month-to-month figure, had been saying that the month-to-month figure was the relevant figure.

Hello and happy CPI Day.

Here's why obviously we should be talking about the month-over-month numbers after the data comes out today.

From the @markets newsletter:https://t.co/Pl5nZqsNJq pic.twitter.com/GPtT2HtaHw

— Joe Weisenthal (@TheStalwart) September 13, 2022

Remember folks, YoY inflation numbers are for politics twitter, not us.

— Joe Weisenthal (@TheStalwart) September 13, 2022

In reaction to a different inflation report last month, Harvard economist Jason Furman said that the month-to-month coverage is the “news” while the year-over-year coverage is the story over what already happened.

P.S. The above focuses on the new news–what we learned about July 2022. We already knew what happened in August 2021 through June 2022 (with some revisions).

Inflation over 12 months is 6.3% (headline) and 4.6% (core).

But should look at the latest changes to update views.

— Jason Furman (@jasonfurman) August 26, 2022

Bloomberg News’ Joe Weisenthal jokingly tweeted, after the worse than expected numbers were reported, that he had always claimed the year-over-year figures were what really mattered.

Headline inflation dropped from 8.5% YoY to 8.3%.

Like I've always said, YoY is what you really need to be focusing on here….

— Joe Weisenthal (@TheStalwart) September 13, 2022

The AP’s claim that inflation fell for a second month is not false. Many news organizations have focused on the annual figure in reporting over the course of the current inflationary era. But reporting that inflation fell for a second straight month risks misleading readers who might think inflation actually declined on a monthly basis. In fact, inflation was up.

A later version of the AP headline was better if still misleading: “US inflation slows for 2nd month but remains stubbornly high.” That’s misleading because inflation accelerated from zero in July to 0.3 in August.

Even President Joe Biden resisted the urge to claim that inflation was coming down in August, instead saying that prices have been “essentially flat” over the past two months. In truth, core inflation is up an average of 0.45 percent over the past two months, which works out to an annualized rate of 5.4 percent inflation.