The headline inflation numbers are dreadful. Strip away some special factors & they're merely bad.
Headline CPI: 1.0% (12.3% annual rate)
Core CPI: 0.6% (7.8% annual rate)
Easing pandemic in US raised services while China lockdowns raised vehicles. But everything else high too.
Headline CPI: 1.0% (12.3% annual rate)
Core CPI: 0.6% (7.8% annual rate)
Easing pandemic in US raised services while China lockdowns raised vehicles. But everything else high too.
Here is CPI monthly and three month changes.
And core CPI (which excludes the volatile food and energy categories).
In the last four months core goods inflation has fallen sharply but core services inflation has picked up. Services is 2.7X the weight of core goods.
More room for goods to fall as supply chains unsnarl.
Some services transitory (airfares).
But shelter is accelerating.
More room for goods to fall as supply chains unsnarl.
Some services transitory (airfares).
But shelter is accelerating.
Here is another way to see the handoff from goods to services by month. The worry about this, again, is that the hopeful story for this yr was the rotation would lower inflation. So far it has not. I still think it will a little when special factors go away. But just a little.
With this unexpectedly high number headline U.S. inflation is now running about 1pp above Euro area inflation and core is running about 2.5pp above it over the last year.
Europe's inflation running hotter than ours in the last six months, but U.S. core still outpacing European cover over that period.
I did a long thread on US vs. European inflation earlier this week.
I did a long thread on US vs. European inflation earlier this week.
Finally here is a scorecard of what it would take to hit the Survey of Professional Forecasters expectations for the year (6.1% CPI / 4.8% core CPI).
Basically would need to go from average monthly prints of 0.80 / 0.52 to 0.22 / 0.26.
Basically would need to go from average monthly prints of 0.80 / 0.52 to 0.22 / 0.26.
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