Thanks to a CNBC article titled “US Cost of Living Hits Record, Passing Pre-Crisis High” by John Melloy, I discovered/realized that the chained consumer price index has now returned to its pre-recession highs. This index measures the cost of living for Americans living in urban areas. You can think of it as the cumulative impact of inflation over time. In 2000, this index measured 102 (normalized to 100 for 1999). It hit an all-time high of 126.918 July, 2008, right before the recession savaged the economy. This cost of living index hit 127.429 in February (2011). (Click here to get the historical data – select “C-CPI-U US All Items – SUUR0000SA0”)
Chained CPI has made a full recovery from the recession
Melloy appropriately observes at the end of his article:
“The cost of living for Americans is now above where it was when housing prices were in a bubble, stock prices at a record, unemployment low and consumer confidence was soaring. Something has gotta give.”
It is difficult to predict how these inflationary pressures will resolve themselves – having more historical data on this index could help. But at least this small window on overall cost of living provides one more confirmation that a fear of deflation remains misplaced sentiment.
