April 2024 CPI and TIPS inflation adjustments for June

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Kevin M
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April 2024 CPI and TIPS inflation adjustments for June

Post by Kevin M »

The CPI numbers for April were released by the Bureau of Labor and Stastics (BLS) today. All CPI data also can be retrieved from FRED, Federal Reserve Economic Data, which is where I get them from. The CPI all urban consumers not seasonally adjusted (CPIAUCNS is the FRED designation) value for April is 313.548. This is a 0.39% increase over March (= 313.548/312.332-1), and a 3.36% increase over April 2023 (year over year or YoY).

The April CIPAUCNS sets the TIPS reference CPI, used for TIPS inflation adjustments, for July 1. The TIPS daily inflation adjustment for each day from June 2 to June 30 are calculated as the linear interpolation between the ref CPI values for 6/1 = 312.332 and 7/1 = 313.548. So the ref CPI is for 6/2/2024 is 312.37253 (=312.332 + 1/30 * (313.548-312.332); the value is rounded to 5 decimal places.

The .39% total inflation adjustment for June is an annualized inflation adjustment rate of 4.77%. As if often noted, not too much should be read into the adjustment for a single month, since inflation adjustments are volatile. A seasonally adjusted CPI value (CPIAUCSL) also is released, and for April it was 313.207, which compared to March = 312.230 is a 0.31% increase, which is a annualized increase of 3.82% (and YoY increase of 3.36%, same as for the NS YoY increase). Seasonal adjustments remove the well known and quite regular seasonal affects on CPI.

To illustrate all of this, here is a chart of NS and SL CPI value vs month:

Image

Note that the CPI changes for the first half of the year are generally lower than for the second half of the year, which is typical. Thus, the seasonally adjusted values (SL) tend to be lower than the NS values for the first half and higher for the second half of the year.

Here is the same chart, but showing ref CPI date on the X axis:

Image

As explained above, for example, we see the April 2024 CPI values as the 7/1/2024 reference CPI values.

BLS also releases seasonal factors each February. These are calculated as NS/SL * 100, and can be used to seasonally adjust TIPS yields. Viewing a chart of NS/SL provides insight into the regularity of the impact of seasonality of the CPI:

Image

The ratio of the seasonal adjustment (SA) factors for the settlement date and TIPS maturity date can be multiplied by the TIPS unadjusted price to calculate a seasonally adjusted TIPS price, from which a SA yield can be calculated, and I often post charts of the unadjusted and adjusted TIPS yields.
If I make a calculation error, #Cruncher probably will let me know.
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#Cruncher
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Re: April 2024 CPI and TIPS inflation adjustments for June

Post by #Cruncher »

Kevin M wrote: Wed May 15, 2024 11:55 am... All CPI data also can be retrieved from FRED, Federal Reserve Economic Data, which is where I get them from.
I like to get them from these BLS pages:
CUUR0000SA0: All items in U.S. city average, all urban consumers, not seasonally adjusted (CPI-U, used for TIPS and I Bonds)
CUSR0000SA0: All items in U.S. city average, all urban consumers, seasonally adjusted (CPI-U)
CWUR0000SA0: All items in U.S. city average, urban wage earners and clerical workers, not seasonally adjusted (CPI-W, used for SS COLA)
Kevin M, in same post, wrote:The TIPS daily inflation adjustment for each day from June 2 to June 30 are calculated as the linear interpolation between the ref CPI values for 6/1 = 312.332 and 7/1 = 313.548. So the ref CPI ... for 6/2/2024 is
312.37253 ... =312.332 + 1/30 * (313.548-312.332); the value is rounded to 5 decimal places.
If we have to do this repeatedly, we can save entering the old CPI twice with this equivalent formula:

Code: Select all

Interpolated = (new cpi * (day of mo - 1) + old cpi * (mo days - day of mo + 1)) / mo days
So for June 2nd:
   312.37253 = (313.548 *  1              + 312.332 *  29)                       / 30
And for June 15:
   312.89947 = (313.548 *  14             + 312.332 *  16)                       / 30
And for June 30:
   313.50747 = (313.548 *  29             + 312.332 *  1)                        / 30
Kevin M, in same post, wrote:To illustrate all of this, here is a chart of NS [not seasonally adjusted] and SL [seasonally adjusted] CPI value vs month:
...
Here is the same chart, but showing ref CPI date on the X axis:
...
Nice charts!
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