This graphical perspective of the CPI explains why the Fed sees inflation as sticky and "elevated" lately

Last edited Mon May 27, 2024, 06:04 AM - Edit history (4)

https://finance.yahoo.com/news/new-inflation-reading-reinforces-feds-higher-for-longer-stance-144840988.html
(emphasis added)

That was before the last CPI report (May 15) which showed a leveling off of the rolling 3 month average CPI and a slight downturn of the Core CPI. That's a bit of progress. (The new PCE report comes out next Friday, May 31).

All the graphs shown on this page and all links are to seasonally adjusted numbers.

CPI and Core CPI from January 2023 thru April 2024, 3 month rolling average from BLS webpages
The regular CPI followed by the Core CPI
The regular CPI https://data.bls.gov/timeseries/CUSR0000SA0
The core CPI is at http://data.bls.gov/timeseries/CUSR0000SA0L1E

The regular CPI is this one right below --vvv

The Core CPI is this one right above --^^^

From this 16 months perspective, the regular CPI (the upper graph of the two graphs) looks like it is basically going sideways with a lot of zigging and zagging, ending with a 3 month uptick and a one month plateauing.

While the core CPI (the lower graph) appears on a definite upward trajectory over the 7 months beginning in August, and a little easing in the last month. .
(As always, the Fed prefers the core measures for projecting FUTURE inflation).

I did the regular CPI and the core CPI in separate windows and then placed the windows one above the other. To erase the top of my browser that showed between the two windows, I used the Windows Snip tool's Pen tool, right clicking on that and choosing the color white and making the size somewhat larger -- and then applying the resulting thick white pen as a sort-of-an-eraser. It's crude with too much white space between the two graphs, but that's the state of my technology currently.

How to get the 3-month rolling average and other views

To see the month-by-month, and rolling averages of 2 months, 3 months, 6 months and 12 months, one can visit the BLS data & graph page for the CPI at https://data.bls.gov/timeseries/CUSR0000SA0 . Or for the Core CPI at http://data.bls.gov/timeseries/CUSR0000SA0L1E

Then click "More Formatting Options" on the upper right and check whatever checkboxes you want (no harm in checking them all, they show up all on the same page one after the other):

1-month percent change, 2-month percent change, 3-month percent change, 6-month percent change, and 12-month percent change

You might want to change the years to something narrower than the default 2014 to 2024 to zoom in on the years of most interest. Or broaden it or whatever. For the above graphs, I chose 2023 to present.

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All the latest inflation graphs (CPI, PCE, PPI wholesale) with links are at https://www.democraticunderground.com/10143240761#post3

The latest 3 month and one month numbers from the three inflation reports
In the below table, all are seasonally adjusted and annualized
(the above 3-month graphs are NOT annualized. To approximately annualize those, multiply the left scale by 4)
PCE-Personal Consumption Expenditures Price Index (Fed's favorite inflation measure)
CPI-Consumer Price Index (retail)
PPI-Producer Price Index (Wholesale prices)



EDITED TO ADD Monday 5/27 640 AM ET
Forecast for the PCE and Core PCE to be released this Friday May 31
This is the Fed's favorite inflation indicator, particularly the CORE PCE for forecasting FUTURE INFLATION

With April's numbers being as forecast by this group of economists:
https://www.marketwatch.com/economy-politics/calendar -- "The median forecasts in this calendar come from surveys of economists conducted by Dow Jones Newswires and The Wall Street Journal"



The PCE and particularly the Core PCE looks quite a bit better than their CPI counterparts.

Note in comparing the CPI and PCE graphs is that there is a small difference in time scale -- 16 months for the CPI and 13 months for the PCE -- and that the CPI graph is not annualized while the PCE graph is. They are produced by different groups - the CPI by the Bureau of Labor Statistics and the PCE by the Commerce Department. I can't find a rolling 3 month for the PCE, so these are calculated from the index values

FRED: PCE: https://fred.stlouisfed.org/series/PCEPI
FRED: CORE PCE: https://fred.stlouisfed.org/series/PCEPILFE