Tuesday, January 31, 2023
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MoM inflation appears to have peaked


That’s the message today from the PCE deflator.

figure 1: Month-on-month annualized inflation rates for CPI (blue bold), core CPI (tan), PCE deflator (bold sky blue), and core PCE deflator (light green). Dates of peak-to-trough recessions as defined by NBER are shaded in gray. Sources: BLS, BEA via FRED, NBER and author’s calculations.

On a quarter-over-quarter basis, the deceleration appears to be evident, except for core CPI.

figure 2: Annualized quarter-over-quarter inflation for CPI (bold blue), core CPI (tan), PCE deflator (bold sky blue), and core PCE deflator (light green). Dates of peak-to-trough recessions as defined by NBER are shaded in gray. Sources: BLS, BEA via FRED, NBER and author’s calculations.

While Michigan households’ annual expectations for inflation rose slightly in November (5.1% in October versus 5% in October), they were still below expectations for March-April 2022 (5.4%).



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