Figure 1: Headline CPI inflation, m/m (blue), q/q (red) and y/y (green), annualized, %. Figure 2: Core CPI inflation, m/m (blue), q/q (red) and y/y (green), annualized, %. Figure 3: Headline CPI (blue), chained CPI (red) and individual consumption expenditure deflator (green), q/q annualized, %.
M/M CPI inflation 0.4% vs. Bloomberg agreement 0.6%, while core was 0.3% vs. 0.5%. All procedures (m/m, q/q, y/y, headline/core) listed below current peaks.
Figure 3: Headline CPI (blue), chained CPI (red) and personal consumption expenditure deflator (green), q/q annualized, %. Chained CPI changed utilizing Census X-13, ARIMA X-11 seasonal adjustment.
Addendum:
Market response was immediate and large. 10 year bond yield, dollar index both down. Stock market up.
Figure 1: Headline CPI inflation, m/m (blue), q/q (red) and y/y (green), annualized, %. NBER specified peak-to-trough recession dates shaded gray. Source: BLS, author and nbers calculations.
Heres the evolution of the core CPI, using the exact same scale on the left axis when it comes to headline.
Figure 2: Core CPI inflation, m/m (blue), q/q (red) and y/y (green), annualized, %. NBER defined peak-to-trough economic crisis dates shaded gray. Source: NBER, author and blss computations.
Finally, note the official CPI is a Laspeyres base year weights (with the weights altering regularly over the last few years), so tends to overemphasize– for any offered bundle of services and products– the rate of inflation. The chained CPI mitigates that by having the bundle modification each year. The PCE deflator is a chained index which, aside from the included products and services, need to also integrate spending modifications more rapidly than the Laspeyres type indexes.
