A bit old news, but it seems useful to look at what the various metrics show, annualized by month. Chains, cuts and sticky price inflation are all below headlines:
figure 1: CPI month-on-month inflation (blue), chained CPI (brown), 16% adjusted CPI inflation (red), sticky price CPI inflation (green), PCE deflator (black), all in decimal form (i.e. , 0.05 means 5%). Seasonally adjusted chained CPI using Geometric Census X13 (brown). NBER-defined recession dates (peaks and valleys) shades of gray. Source: BLS, BEA, NBER and author’s calculations.
Adjusted inflation rose, but was well below the headline level, suggesting that, while broad-based, there were generally some high components driving the advance. Lower sticky price inflation means that a lot of change comes from flexible price movements, so the downward movement in the headline can be clearly reflected in the overall picture.
Sticky price core inflation is below headline – albeit not by much. This is because energy costs are one of the larger flexible price categories.
figure 2: Chain inflation of core CPI (blue), chained core CPI (brown), sticky price core CPI inflation (green), personal consumption expenditures core deflator inflation (black), all in decimal form (ie 0.05 means 5%) . Seasonally adjusted chained CPI using Geometric Census X13 (brown). NBER-defined recession dates (peaks and valleys) shades of gray. Source: BLS, BEA, NBER and author’s calculations.
Looking ahead, it was noted that gasoline prices fell in tandem with oil prices.
resource: Fred.
Gasoline prices have fallen to 4.646 for the week ended July 11, down 7.2% from the week ended June 13. Literally, gasoline has a weighting of 3.75%, which means that monthly inflation fell by 25 percentage points in July, or more than 3 percentage points on an annualized basis, not counting other ways gasoline prices affect overall prices.
