CPI and inflation: relationship between MoM and YoY values

Ask an Economist

Disinflation describes a lower inflation rate than the previous month, using YoY values. Does it make a different interpretation if the MoM value decreases or increases? I have seen a decrease in the MoM value corresponding to a decrease in the YoY inflation as well as a decrease in a MoM value corresponding to an increase in inflation YoY. Does the MoM value tell you anything about the YoY value? I used to think the MoM value described accelerating or decelerating of the YoY inflation/deflation. Can you please elaborate on the relationship between MoM and YoY values, if any? Thank you.


The easiest way to see the connection between Month on Month Inflation and Year on Year inflation is to take a step back and recall where these numbers are coming from.


The inflation numbers we see reported are reflecting the changes in the cost of a basket of goods that is representative of the expenditures by the average American Consumer. In a simplified way, the prices for all goods and services consumed in the US are collected every month and used to calculate what would be the cost of buying that representative basket of goods every month. We call that number (as compared to a base period) the "Consumer Price Index" or CPI. That tries to capture the overall change of prices in the economy.


Since the objective of the CPI is to measure changes in Price Level, it is usually the case that we will look at how that index changed relative to last month (the MoM) or 12 months ago (the YoY). Note that the CPI underlying both measures is the same, the only thing that changes is the comparison point.


You can go to https://www.bls.gov/data/ and look at the historical data for the Consumer Price Index. As you will see the price index is this somewhat strange number (251 for January 2019), but the important thing is that I can compare it with the CPI to any other period that I choose and obtain the changes in prices between those periods. So the YoY% changes are the accumulated changes in the last 12 months. For example:



  CPI MoM% YoY%
Jan-17 242.839    
Feb-17 243.603 0.31%  
Mar-17 243.801 0.08%  
Apr-17 244.524 0.30%  
May-17 244.733 0.09%  
Jun-17 244.955 0.09%  
Jul-17 244.786 -0.07%  
Aug-17 245.519 0.30%  
Sep-17 246.819 0.53%  
Oct-17 246.663 -0.06%  
Nov-17 246.669 0.00%  
Dec-17 246.524 -0.06%  
Jan-18 247.867 0.54% 2.07%
Feb-18 248.991 0.45% 2.21%
Mar-18 249.554 0.23% 2.36%
Apr-18 250.546 0.40% 2.46%
May-18 251.588 0.42% 2.80%
Jun-18 251.989 0.16% 2.87%
Jul-18 252.006 0.01% 2.95%
Aug-18 252.146 0.06% 2.70%
Sep-18 252.439 0.12% 2.28%
Oct-18 252.885 0.18% 2.52%
Nov-18 252.038 -0.33% 2.18%
Dec-18 251.233 -0.32% 1.91%
Jan-19 251.712 0.19% 1.55%



Source: BLS

CPI-All Urban Consumers (Current Series)
Original Data Value
Series Id: CUUR0000SA0
Not Seasonally Adjusted
Series Title: All items in U.S. city average, all urban consumers, not seasonally adjusted
Area: U.S. city average
Item: All items
Base Period: 1982-84=100
Years: 2009 to 2019


Last updated on February 25, 2019