PCE chillin at 3% and .4% for the last 3 MoM numbers is too high. Would indicate to me that current rates are below the neutral rate. I know the Fed isn’t equipped to dealing with price shocks caused by political actors but the population feels inflation all the same no matter the cause. Inflation expectations will likely begin to reflect this as well and start to creep up.
Happy_Feet333 on
Yeah, this is most definitely going to be revised upwards… in about 2 months.
But, for some reason, CNBC is reporting this as truthful, instead of telling people that it’s likely bullshit. It’s getting to the point that America’s press is like TASS or Pravda during the days of the Soviet Union with regards to economic numbers.
The actual report, so you can skip the CNBC summary and just read it for yourself.
Some highlights:
>The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in
February, after rising 0.2 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12
months, the all items index increased 2.4 percent before seasonal adjustment.
>The index for shelter rose 0.2 percent in February and was the largest factor in the all items monthly increase. The
food index increased 0.4 percent over the month as did the food at home index, while the food away from home index rose
0.3 percent. The index for energy also increased in February, rising 0.6 percent.
>The index for all items less food and energy rose 0.2 percent in February. Indexes that increased over the month
include medical care, apparel, household furnishings and operations, airline fares, and education. Conversely, the
indexes for communication, used cars and trucks, motor vehicle insurance, and personal care were among the major
indexes that decreased in February.
>The all items index rose 2.4 percent for the 12 months ending February, the same increase as reported for the 12 months
ending January. The all items less food and energy index rose 2.5 percent over the year, also the same increase as
reported for the 12 months ending in January. The energy index increased 0.5 percent for the 12 months ending February.
The food index increased 3.1 percent over the last year
In general, it’s better to look at month over month trends rather than what the headlines report – which is just the year over year figure. Year over year includes everything from last march till now.
Month over month in core inflation is 0.2, 0.3, 0.2 respectively – that comes out to an annualized pace in core inflation of a little over 2.8%. So much higher than the Fed wants, and worryingly that’s been trending upwards a bit rather than down.
Headline is of course much worse, with energy prices taking headline inflation way up, but the real story here isn’t how energy is impacting March inflation, it’s that core inflation is sustaining much stronger than it should be. This is likely tariff impact making it’s way through to actual consumer prices.
3 Comments
PCE chillin at 3% and .4% for the last 3 MoM numbers is too high. Would indicate to me that current rates are below the neutral rate. I know the Fed isn’t equipped to dealing with price shocks caused by political actors but the population feels inflation all the same no matter the cause. Inflation expectations will likely begin to reflect this as well and start to creep up.
Yeah, this is most definitely going to be revised upwards… in about 2 months.
But, for some reason, CNBC is reporting this as truthful, instead of telling people that it’s likely bullshit. It’s getting to the point that America’s press is like TASS or Pravda during the days of the Soviet Union with regards to economic numbers.
https://www.bls.gov/news.release/cpi.nr0.htm
The actual report, so you can skip the CNBC summary and just read it for yourself.
Some highlights:
>The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in
February, after rising 0.2 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12
months, the all items index increased 2.4 percent before seasonal adjustment.
>The index for shelter rose 0.2 percent in February and was the largest factor in the all items monthly increase. The
food index increased 0.4 percent over the month as did the food at home index, while the food away from home index rose
0.3 percent. The index for energy also increased in February, rising 0.6 percent.
>The index for all items less food and energy rose 0.2 percent in February. Indexes that increased over the month
include medical care, apparel, household furnishings and operations, airline fares, and education. Conversely, the
indexes for communication, used cars and trucks, motor vehicle insurance, and personal care were among the major
indexes that decreased in February.
>The all items index rose 2.4 percent for the 12 months ending February, the same increase as reported for the 12 months
ending January. The all items less food and energy index rose 2.5 percent over the year, also the same increase as
reported for the 12 months ending in January. The energy index increased 0.5 percent for the 12 months ending February.
The food index increased 3.1 percent over the last year
In general, it’s better to look at month over month trends rather than what the headlines report – which is just the year over year figure. Year over year includes everything from last march till now.
Month over month in core inflation is 0.2, 0.3, 0.2 respectively – that comes out to an annualized pace in core inflation of a little over 2.8%. So much higher than the Fed wants, and worryingly that’s been trending upwards a bit rather than down.
Headline is of course much worse, with energy prices taking headline inflation way up, but the real story here isn’t how energy is impacting March inflation, it’s that core inflation is sustaining much stronger than it should be. This is likely tariff impact making it’s way through to actual consumer prices.