The trend continues. The actual CPI rose 0.3% in May--an annualized price inflation rate of 3.7%--but the BLS "seasonally adjusted" it down to 0.1%, which is a much more reasonable annualized inflation rate of 1.2%.

For those of you who are newcomers, let me bring you up to speed: The BLS has "seasonally adjusted" the CPI downward every month this year. And it's not little tinkerings on the edges, these are significant differences. All told, from Dec 2008 through May 2009, the raw CPI rose at an annualized rate of about 4.2%.

In contrast, the seasonally adjusted CPI--the figure that the media reports, before they throw out energy and food prices and talk about "core [seasonally adjusted] CPI"--rose at an annualized rate of only 1.5%.

I should point out that this is not a smoking gun proof of conspiracy; I checked earlier years, and in both 2007 and 2006, from January through June the seasonal adjustments always dampened the official inflation, while the adjustments went the other way from July to December. For a different point, if you do the seasonally adjusted vs. non-seasonally adjusted CPI changes from Dec 05 through May 06, you get annualized inflation rates of 3.7% vs. 7.1%.

So, maybe what the BLS has been doing the last few months isn't as shady as I originally thought. We won't really know until January 2010, when we can finally compare the yearly increase in S.A. vs. N.S.A. prices over the whole year of 2009.

If nothing else, though, it is interesting that while everyone is still warning of us falling off a deflationary cliff, actual prices have risen at an annualized rate of 4.2% since December.