Posted originally on May 14, 2025 by Martin Armstrong 

The numbers are in, and the Consumer Price Index fell to 2.3% this April annually, down from March’s 2.4% reading, according to the Bureau of Labor Statistics. April’s reading is the lowest since February 2021.

Shelter costs drove more than half of all items monthly, increasing by 0.3% on a monthly basis, and 4% annually. The energy index experienced a 0.7% increase from the month prior, slightly offset by a decrease in gas (-0.1% monthly; -11.8% annually), fuel oil (-1.3% monthly; -9.6% annually), and energy commodities (-0.2% monthly; -11.5% annually). Electricity rose 0.8% monthly and is up 3.6% for the year, while piped utility advanced 3.7% and is up an alarming 15.7% annually.

Yes, shelter is included in the CPI, but it’s not real-time, and it’s not accurate. The way they calculate shelter is through something called Owner’s Equivalent Rent. It’s based on what homeowners think they would charge to rent their homes, not what people are actually paying in the real world. They consider the actual purchase of real estate an investment, and therefore, that does not go on the CPI report. actual rents and home prices have surged because of artificially constrained supply, institutional buyers, and rising taxes. So the CPI gives a watered-down version of housing inflation.

Food inflation declined by -0.1% for the month, with a 2.8% yearly increase. The meats, poultry, fish, and eggs index rose 7% over the last 12 months, driven by the 49.3% uptick in eggs. The index for nonalcoholic beverages rose 3.2% over the same period, while the index for other food at home rose 0.7%. The dairy and related products index increased 1.6% annually. The cereals and bakery products index remained stagnant over the past year, while the index for fruits and vegetables fell 0.9% over the same period.

Food and energy are the most volatile and politically sensitive components, so they’ve built the CPI to minimize their impact. They’re not excluded from the calculations but they’re manipulated. The BLS uses a tactic called hedonic adjustments. If the quality of a product improves, say a glass jar instead of plastic, they lower the price in the index, even if it costs more in the store. Then there’s substitution. If steak becomes too expensive, they assume you’ll buy chicken. Then if chicken goes up, maybe pork.

Energy is the same game. Oil prices might spike, but they use seasonal adjustments or shift the weightings so it doesn’t move the index much. If gasoline prices double, they’ll say your “transportation services” only rose 4%. It’s accounting gymnastics. Inflation affects interest rates, cost-of-living adjustments, entitlement payouts, and trust in government. So they cook the numbers.

Could this be the best reading for 2025? Global instability could result in sharp increases in food and energy. The impact of tariffs remains to be seen. The April CPI number is yet another example of how governments manipulate statistics to serve political ends. No one believes that prices are significantly down. Americans are experiencing a downgraded quality of life firsthand. Don’t take the CPI at face value. Look at what people are paying out of pocket — energy, food, shelter, taxes. Taxes are another aspect they conveniently exclude when calculating our cost of living. These are rising far faster than the CPI admits. We are in the middle of a confidence crisis, and instead of telling the truth, they’re pretending everything is fine.