the staff of the Ridgewood Blog
Ridgewood NJ, consumer prices rose slightly during President Trump’s first full month in office, according to the latest Consumer Price Index (CPI) report from the Labor Department.
Wholesale prices (PPI) were flat in February providing some more welcome news for inflation amid tariff fears, the Bureau of Labor Statistics reported Thursday.
The producer price index, considered a leading indicator for pipeline inflation pressures, showed no gain for the month after jumping an upwardly revised 0.6% in January, seasonally adjusted figures showed. Economists surveyed by Dow Jones had been looking for a 0.3% increase.
Excluding food and energy, core PPI decreased 0.1%, also against an estimate for a 0.3% increase. Core prices also excluding trade services showed a gain of 0.2%.
February CPI Report: Inflation Continues Its Climb
- The CPI rose 0.2% in February compared to January.
- Annual inflation hit 2.8%, slightly below economists’ predictions of 2.9%.
- This marks the fourth consecutive month of rising inflation, up from 2.4% in September to 3% in January.
While many have been concerned about inflationary pressures, some analysts argue that the government’s backward-looking CPI data is not the best way to measure real-time inflation.
Government Data vs. Real-Time Inflation Tracking
One alternative measure, Truflation, aims to provide real-time, unbiased inflation data. Unlike the CPI, which uses historical data to estimate current inflation, Truflation analyzes real-time economic metrics to give a more accurate picture of price changes.
How Does Truflation Compare to CPI?
- Government CPI (March 2024): 3.0% year-over-year inflation
- Truflation’s Real-Time Data: 1.39% inflation
That’s a 50% lower inflation rate than the government’s official report!
Critics might argue that Truflation underestimates inflation, but the data suggests otherwise. In December 2024, Truflation recorded inflation at 3.1%, beating the CPI report by nearly two months. If this trend continues, we may see government inflation metrics decline in the coming months.
The Bigger Issue: Inflation’s Impact on Consumers
Truflation also measures cumulative inflation since January 2020, which now stands at over 26%.
👉 What does this mean? A dollar in 2020 now has the purchasing power of only $0.74 today. That’s a massive loss of 26% in five years, making it increasingly difficult for American consumers to keep up with rising costs.
What This Means for the Federal Reserve
The Federal Reserve’s next move on interest rates depends on which inflation data they trust:
- If government CPI data (3%) is correct, the Fed should keep rates high to control inflation.
- If Truflation (1.39%) is accurate, then the Fed needs to cut rates quickly to avoid economic slowdown.
At the moment, Fed Chair Jerome Powell and his team have not signaled that they view disinflation as a major issue. However, if real-time data proves correct, we may see a shift in monetary policy sooner than expected.
Final Thoughts: Why Truflation Matters
The traditional CPI measure lags behind reality, making it harder for businesses, policymakers, and consumers to respond to real-time economic changes. By contrast, Truflation’s real-time model provides a more accurate and transparent look at what’s really happening in the economy.
As the Federal Reserve weighs its next move, the real question is: Will they continue relying on outdated inflation reports, or will they embrace real-time economic data?
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