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July Inflation Rate | Economy Browser


CNN title note “A key inflation indicator rose in July at the fastest rate in 30 years”, The key inflation indicator is year-on-year (y/y) personal consumption expenditure (PCE) inflation. In fact, this headline is actually incorrect, because June’s annual month-on-month inflation was actually slightly higher.But anyway, by focusing on the y/y rate, they missed the main message of today freed — The quarter-on-quarter (m/m) annualized PCE inflation rate dropped significantly, from 6.6% to 5.1%. In addition, the core counterpart has also dropped, from 5.8% to 4.1% (0.3% m/m reached the Bloomberg consensus.)

This personal income and expenditure data completes the inflation indicators for July.Update the chart from then on August 11th post, We have the following.

figure 1: From all cities’ CPI (blue), personal consumption expenditure (PCE) deflator (black), chain CPI (brown), sticky price CPI (green) and 16% average CPI (red), the annualized rate of inflation. Chain CPI inflation seasonally adjusted by the author. Source: BLS, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Cleveland, through FRED, and the author’s calculations.

The general discussion that emphasizes y/y changes is understandable, but frustrating, because in the current context, it actually tells almost as much of the past as it does now.

What about the core measures? The core CPI inflation rate has also fallen sharply, as shown in Figure 2 (the pruned core is not shown).

figure 2: The chain CPI (blue), the personal consumption expenditure (PCE) deflator (black), the chain CPI (brown), and the sticky price CPI (green) of all cities’ CPI (blue). Chain CPI inflation seasonally adjusted by the author. Source: BLS, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Cleveland, calculations from FRED, NBER and the author.

From the perspective of the components of the PCE deflator, except for energy goods and services (increased from 1.5% to 1.6% on a month-on-month basis) and nondurable goods and services (both remain unchanged), each inflation category is relative There was a decrease in June.

In other words, repeat my conclusion Post on August 14, Every easily measurable comprehensive indicator of monthly inflation—CPI, PCE deflator—is declining.

The five-year inflation balance rose by 3 basis points.Nevertheless, the break-even point is still lower than the level after the CPI was released in July (and it must be remembered that due to inflation and liquidity premiums, the unadjusted break-even point is a distorted measure of expected inflation, as in This post).

image 3: The five-year inflation break-even point is calculated as the five-year treasury bond yield minus the five-year TIPS yield (blue). The five-year break-even point is adjusted by the inflation risk premium and the liquidity premium per DKW, both in% unit. Source: FRB through FRED, Ministry of Finance, Kunshan After D’amico, Kim and Wei (DKW) interviewed 8/6 and the author’s calculations.



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