Beware of runaway headline inflation

Core CPI: Blips or Trends Here's a plot of three measures of core m/m inflation. I don't see hyper (or even high ) inflation on the horizon, as some do [0] [1]. Since one observation doesn't make a trend, for good measure I include also 3 month inflation.

Doug Short submits: Note: Charts below updated to include the latest Personal Consumption Expenditures (PCE) in yesterday's Personal Income and Outlays news release from the BEA. As the charts below illustrate, core CPI and core PCE are both well below the Federal Reserve's 2% target, sometimes referenced as a 1.75%-2% range.

Doug Short submits: I've updated the charts below to include the March Personal Consumption Expenditures data from the Bureau of Economic Analysis. I've also calculated the annualized rate of change to two decimal places for more precise comparisons in the close-up charts.

By Doug Short: Today's release of the March Producer Price Index (PPI) for finished goods shows a month-over-month decrease of 0.6%, seasonally adjusted, in Headline inflation. Core PPI rose 0.2%. Briefing.com had posted a MoM consensus forecast of -0.1% for Headline and 0.1% for Core PPI. The March decline in Headline PPI follows two months of increases, which had followed three months of declines. Year-over-year Headline PPI is up 1.1% and Core PPI is up 1.7%.

Doug Short submits: The monthly Personal Income and Outlays report was published Monday by the Bureau of Economic Analysis. The first chart shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. I've also included an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation.

Core inflation and service-sector inflation are still far below long-run averages.