A mixed bag in CPI this morning -- the FOMC tomorrow will be able to project whatever it wishes into it. Goods, half that basket, are in downright year-on-year deflation. And most categories are decelerating. But Powell's super-secret private index, core services ex-shelter, a minority of the basket (but the one he focuses on), is accelerating (thanks to the methodological change in the calculation of medical services, which have an even larger weight in PCE than in CPI). This is not the clarion call warning of deflation that we had expected and hoped for. We'll have to wait another month for that -- nothing in this changes our expectations.
US CPI/PPI
US CPI/PPI
Tuesday, November 14, 2023
It's all going according to plan. CPI ex-OER at 1.71% YOY -- and negative 0.25% on the month! Core ex-OER at 2.35% YOY. Now if only the Fed could look at the facts instead of its obsolete models.
US CPI/PPI
Thursday, October 12, 2023
OK everybody, calm down (that means you, Jay). Core CPI ex-OER (the only true measure of the actual inflation signal) is at 2.4% year-on-year, below the Fed's target of 2.5%. Month-on-month it's just 2.14%. Three-month annual just 1.41%. We win. Be happy.
US CPI/PPI
Wednesday, September 13, 2023
As the markets expected, energy jolted August headline CPI higher -- prices in that sector alone grew 92% at an annual rate. But that's an outlier. Core inflation has grown only 2.4% over the last three months at an annual rate. We're at the Fed's target in the measure Powell says is more important than headline.
US CPI/PPI
Thursday, August 10, 2023
CPI year-over-year beats expectations, but rises because an anomalous year-ago comparable of zero rolls off. It’s all OER. Without it, CPI was almost unchanged on the month. Core excluding OER, the best measure of the true inflation signal, outright deflated on the month, and is now at a mere 3% year-on-year.
US CPI/PPI
Wednesday, July 12, 2023
CPI beats our already dovish expectations -- unrounded, CPI printed at 2.97% year-on-year, which is 93% back to the Fed's target in just 12 months since June's peak. Core fell too, to 4.8% year-on-year, and even lower at 3.2% month-on-month. Our favorite measure, Core ex-OER, actually deflated on the month. The Fed simply has to "skip" again.
US CPI/PPI
Tuesday, June 13, 2023
CPI excluding OER is at 2.7% YOY, just 20 bp from the Fed's target for it. OER is once again the hottest single category, but at 8% YOY we've just printed the first sequential decline since this inflation cycle began. Sure, Powell can gripe that his pet "core services ex-housing" index is still at 5.25% YOY, but that's the lowest in the year since he first panicked about suddenly non-transitory inflation (just when it was becoming transitory, by the way). If today's data can't stay the Fed's hand, then they are officially delusional. Update (June 14) -- PPI is in collapse, with final demand at a mere 1.2% year-on-year, and almost all sub-categories in outright deflation. Remember: PPI is the gateway drug to CPI. Deflation is coming.
US CPI/PPI
Wednesday, May 10, 2023
Best CPI report ever. The CPI version of Powell's unpublished key index, core services ex-OER, took another big drop on a YOY basis, and on a MOM basis it's just 3.9%. If he can't admit this is clear and compelling evidence of inflation abating, he's a liar. But we already knew that.
US CPI/PPI
Wednesday, April 12, 2023
Good news. Without just one item Owners Equivalent Rent, CPI was actually negative on the month. And Powell's secret index -- core goods without shelter -- is decelerating. Next challenge for the Fed: find the bad news here.
US CPI/PPI
Tuesday, March 14, 2023
With a white-knuckles potential bank run going on, nobody cares about CPI apparently. Sadly, though, Jay Powell's secret private index (core services ex-shelter) didn't decelerate.