Developing Trend Equations for CPI:As Empirical Analysis 2001-2015

Since the 2008 recession, overall inflation as measured by CPI has been perceived to be almost non existent. In recent months, however, inflation is picking up, which in a perverse sort of way is seen as good for the economy. The purpose of this study, therefore, is to more clearly understand CPI trend inflation. To that end, I looked at a long term trend, 2001-2014, two intermediate term trends, 2001-2007 and 2009-2014 and a short term trend, 2013-2014. Monthly and yearly linear trend equations were developed for the long and intermediate term time periods. For the shorter time period both a simple monthly year-over-year comparison and a sequential monthly comparison of the change of inflation were calculated. Three key findings were discussed: 1) since 2001, the long term trend has risen close to the target rate of 2%. 2) There has been a decline in the inflation rate from 2001-2007 period to the 2009-2014 period. 3) Short term inflation rates are more robust indicating a bottoming out in the decline in inflation.https://ecommons.udayton.edu/stander_posters/1737/thumbnail.jp