When they give monthly inflation figures, is that how much it’s gone up that month, or averaging across the year?

Question

Each month you’ll get an article headline like “Inflation at 3% in July” or whatever. Does that mean prices went up 3% in July, or does it mean across this year the average after July is 3%? I know prices are going up lots lately but if it’s 3% each month that’s 36% a year? Please explain to my silly little brain.

In: Economics

Answer 1

It is and should be annualized. There are seasonal factors across almost every segment that would cause pretty significant fluctuations month to month. Comparing prices to the same month of the previous year smooths that out.