Claim: The Associated Press reported on Tuesday morning that “U.S. inflation falls for 2nd straight month.”

Verdict: Misleading.

The Bureau of Labor Statistics said on Tuesday that consumer prices rose three-tenths of a percentage point in August. That represents an acceleration of inflation compared with July, when the month-to-month figure was unchanged compared with the prior month.
On a year-over-year basis, the Consumer Price Index was up 8.3 percent. This was more than the 8.1 percent annual gain forecast by economists. It was down compared with a month earlier, when the CPI had a year-over-year gain of 8.5 percent.

Many leading financial journalists and economists, expecting a decline in the month-to-month figure, had been saying that the month-to-month figure was the relevant figure.

In reaction to a different inflation report last month, Harvard economist Jason Furman said that the month-to-month coverage is the “news” while the year-over-year coverage is the story over what already happened.

Bloomberg News’ Joe Weisenthal jokingly tweeted, after the worse than expected numbers were reported, that he had always claimed the year-over-year figures were what really mattered.

The AP’s claim that inflation fell for a second month is not false. Many news organizations have focused on the annual figure in reporting over the course of the current inflationary era. But reporting that inflation fell for a second straight month risks misleading readers who might think inflation actually declined on a monthly basis. In fact, inflation was up.

A later version of the AP headline was better if still misleading: “US inflation slows for 2nd month but remains stubbornly high.” That’s misleading because inflation accelerated from zero in July to 0.3 in August.

Even President Joe Biden resisted the urge to claim that inflation was coming down in August, instead saying that prices have been “essentially flat” over the past two months. In truth, core inflation is up an average of 0.45 percent over the past two months, which works out to an annualized rate of 5.4 percent inflation.