Surging prices are haunting consumers in the United States and other countries, but not in Japan, where inflation was 0.1 percent in October 2021. By contrast, U.S. consumer prices grew 6.2 percent in October 2021 over the previous 12 months.—The Associated Press
What is a CPI reference base period?
A CPI reference base period is a period in which the CPI is defined to equal 100. Japan’s CPI reference base period is 2020—the 12 months from January 2020 through December 2020. The U.S. CPI reference base period is 1982–1984—the 36 months from January 1982 through December 1984.
This table documents Japan’s CPI and U.S. CPI in both reference periods and in four recent months.
Has Japan or the United States had the lower inflation rate since the early 1980s?
In December 2021, U.S. CPI was 280.1, which means that over the years since 1982–1984, the U.S. price level rose by 180.1 percent. Over the same period, Japan’s price level rose from 80.5 to 100.1, which is 24.3 percent ([100.1 – 80.5] ÷ 80.5 × 100 = 24.3). Japan has had a much lower inflation rate than the United States since the early 1980s.
Are the inflation rates reported in the news clip correct?
The news clip reports that the inflation rate in October 2021 was 0.1 percent in Japan and 6.2 percent in the United States. Use the CPI data in the table to check these claims.
For Japan, the price level rose from 99.8 in October 2020 to 99.9 in October 2021, so the inflation rate was 0.1 percent ([99.9 – 99.8] ÷ 99.8 × 100 = 0.1).
For the United States, the price level rose from 260.4 in October 2020 to 276.6 in October 2021, so the inflation rate was 6.2 percent ([276.6 – 260.4] ÷ 260.4 × 100 = 6.2).
The inflation rates reported in the news clip are correct.
What were the inflation rates in the two countries in 2021?
For Japan, the price level rose from 99.3 in December 2020 to 100.1 in December 2021, so the inflation rate was 0.8 percent ([100.1 – 99.3] ÷ 99.3 × 100 = 0.8).
For the United States, the price level rose from 261.6 in December 2020 to 280.1 in December 2021, which is an increase of 7.1 percent ([280.1 – 261.6] ÷ 261.6 × 100 = 7.1).
Figures 1 and 2 show the price levels and inflation rates in the United States and in Japan when December 2020 is used as the reference base period.
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