Today’s Inflation Is Half the Reported Rate

You may be wondering how the news is talking about ‘inflation slowing’ and that perhaps things are turning around when inflation is still being reported at a very high level of 5.0%.

The excitement seems to be from looking at the June 2022 number of 9.1% vs. March’s number of 5.0%, using the most common index called CPI-U.

But that’s still a high number. Should we really be celebrating a move from very bad to just bad?

Thankfully that bad number of 5.0% is a bit misleading. Remember that the inflation number that is most reported is the ‘year over year change’ – what happened most recently compared to what happened 12 months prior.

March 2023 12-month inflation is reported at 5.0%

In April 2023 the inflation numbers are using data from March 2022 to March 2023. That is 12 months of data, some of which happened over a year ago. The 12-month nature of this number could deceive you into thinking inflation is lower than it is (like earlier in 2022) or that its higher than it really is (like now, in early 2023).

Inflation was certainly accelerating into 2022 with a peak 12-month number of 9.1% in June, yet this hid how bad inflation truly was in Spring 2022. The 4-month number from March through June was 13.9%.1 And the CPI-W measure (which Social Security COLA is based on) was 15.4%!2

March 2023 recent inflation is only 2.5%

Dive deeper into the most recent CPI-U number from March 2023 and you will see the inflation numbers from June through March (since the ‘peak’) are at 2.5%,3 which is half the reported 5.0% inflation number.

When you hear the news say, ‘Inflation is …’ what they should be saying instead is, ‘Inflation was…’ 

Inflation was 5.0% over the most recent 12-month period.

But inside that 12-month number what really happened was inflation of 12.8% for the first 3 months from March 2022 – June 2022, then only 2.5% for the past 9 months from June 2022 – March 2023.4

Can You Predict Future Inflation?

Now if you are trying to figure out what inflation actually is, or what it will be, that’s anyone’s guess.

However, you might turn to an indicator called Money Supply. It’s basically the US dollar value of all the money in the economy. Many economists believe the growth in the money supply is directly correlated with and influencing inflation.

How is Money Supply Connected to Inflation?

Notice the large growth in Money Supply in 2020 and 2021. Notice the large growth in inflation in 2021 and the first half of 2022.  The current Money Supply numbers really flattened out and turned negative since March 2022. This may explain why the inflation numbers since June 2022 have been much lower, and also suggests the lower inflation trend may continue.

We are very much hoping this lower inflation trend continues as many people felt the pain of high inflation in late 2021 and early 2022. Hopefully, their belt tightening and patience will be rewarded in 2023 with a much lower inflation situation than currently reported.


Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals, or investment objectives. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.

The Consumer Price Index (CPI-U) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.


1. Federal Reserve Economic Data, CPI-U, not seasonally adjusted. February 2022 CPI-U of 283.716. June CPI-U of 296.311. Annualized rate = (296.311/283.716) ^ (12/4) – 1 = 13.9%

2. Federal Reserve Economic Data, CPI-W, not seasonally adjusted. February 2022 CPI-W of 278.943. June 2022 CPI-W of 292.542. Annualized rate = (292.542/278.943) ^ (12/4) – 1 = 15.4%

3. Federal Reserve Economic Data, CPI-U, not seasonally adjusted. June 2022 CPI-U of 296.311. March 2023 CPI-U of 301.836. Annualized rate = (301.836/296.311) ^ (12/9) – 1 = 2.5%

4. Federal Reserve Economic Data, CPI-U, not seasonally adjusted. March 2022 CPI-U of 287.504. June CPI-U of 296.311. March 2023 CPI-U of 301.836.

March 2022 – June 2022 annualized rate = (296.311/281.148) ^ (12/3) – 1 = 12.8%
June 2022 – March 2023 annualized rate = (301.836/296.311) ^ (12/9) – 1 = 2.5%


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