Wed, 19 May 2004

Stupid AP Inflation Headline

Sigh. Some non-economist writer was given the task to write about inflation and botched it. Or, to be fair, some idiot editor got hold of the article and wouldn't let go of it until he had thoroughly screwed it up. "Wholesale prices up 0.7 percent in April, showing inflation on the rise". It's not just the headline that they botched, either, because the first paragraph ends in "... providing fresh evidence that inflation is awakening after a long slumber."

Inflation is not a general rise in prices. Inflation will cause prices to rise, but other things can also cause prices to rise. For example, everything gets transported somewhere, so if the price of transportation rises, prices will generally rise. Inflation is, instead, caused by an inflated supply of money. If you read farther on in the article, you'll see that the real inflation rate is only 0.2%, in line with analysts' expectations.

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