Consumer prices rose 8.5% in March, slightly hotter than expected and the highest since 1981

That’s the headline on a CNBC report on April 12, 2022. Prices rising 8.5% in March? That’s really scary. I don’t blame the reporter, Jeff Cox. His first bullet gets it right:

Headline CPI in March rose by 8.5% from a year ago, the fastest annual gain since December 1981 and one-tenth of a percentage point above the estimate.

That’s somewhat scary too, but not nearly as scary as the misleading headline.

The Wall Street Journal headline writer also misled readers:

U.S. Inflation Accelerated to 8.5% in March, Hitting Four-Decade High

This is misleading in two ways. The first is similar to the way the CNBC headline misled. Inflation didn’t go to 8.5% in March. But also, inflation didn’t clearly accelerate. It rose. So the headline writer is off by one derivative.

By the way, as Alan Reynolds at the Cato blog recently pointed out, the good news is that “core inflation” is less high. On April 12, he wrote:

After stripping out direct energy and food prices, the core consumer price index rose only 0.3% in March – down from 0.5% in February and 0.6% in January. The graph shows that core inflation was highest in the second quarter of last year, when it rose by 0.8% a month.

I think Alan is showing a lot of integrity here. Libertarians and conservatives are often tempted to bash Joe Biden. There’s a lot that should be bashed. But we should never overstate the case.

Of course, what matters, as Alan recognizes, is the overall inflation rate, not just core inflation. But his point, which he has made in other posts, is that there is some reason to think that energy prices won’t rise further, and might even fall from their high level, which means that the inflation rate is likely to fall. Fall, not “decelerate.”

Don’t get me–or Alan–wrong. Inflation is still too high. But my prediction a year ago that we won’t hit 10 percent in any 12-month period between May 2021 and December 2022 is looking good. I hedged it with probabilities but here’s what I wrote on May 20, 2021:

I would put an 80 percent probability on the prediction that before the end of 2022, there will be at least one twelve-month period in which the CPI has risen by at least 5 percent. I would also estimate less than a 20 percent probability that in the same time period, there will be a twelve-month period in which the inflation rate hits Carter-era 10 percent.