Category Archives: Inflation Watch

U.S. Inflation Watch Sep-2015

The Labor Dept. reported that headline inflation fell 0.2% in September from August and was flat or zero on a year over year basis. However, the core CPI which excludes volatile food and energy was up 0.2% over the previous month and increased 1.9% year over year, marking its biggest gain in a year. Majority of the gain in the core CPI was driven by shelter costs which increased 3.2%. However, the inflation measure preferred by the Federal Reserve, core PCE has a 20% weighting to shelter cost...

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Various Recent Inflation Measures Trending towards 2%

There are various ways to measure inflation including the headline CPI, as below: CPI or Headline Inflation=0% Core CPI=1.8% Cleveland Median CPI=2.3% Sticky Price CPI by Atlanta Fed=2.2% Dallas Fed Trimmed Mean Personal Consumption Expenditures (PCE) preferred by FOMC=1.7% These are year over year numbers. Hence, despite the decline in commodity prices the Fed believes that inflation is heading towards its 2% target....

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U.S. Inflation Watch July-2015

Post On July 24, 2015 by

While broadly in line with expectations, last Friday’s consumer price index (CPI) report affirms our view that inflation remains on an upward trend. Pimco projects year-over-year core CPI will finish 2015 at 2.10%, considerably stronger than consensus expectations at the start of the year, and well above 2014’s rate of 1.61%. However, the drivers of inflation may begin to change over the cyclical horizon. For example, shelter inflation has driven much of the recent strength in cor...

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U.S. Inflation Watch-December 2014

U.S. consumer prices rose at 0.8%,  the slowest annual pace in more than five years in December and are poised to slow further in coming months amid the global plunge in oil prices. That was sharply slower than the 1.3% annual growth pace seen in November, and the lowest annual reading since October 2009. Excluding the volatile categories of food and energy, so-called core prices rose 1.6% on the year, slowing from a 1.7% annual gain in November and 1.8% annual growth in October. (Source: ...

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Oil declines 46% in 2014. What's in store for 2015?

Oil futures closed the year at more-than five-year lows, as plentiful supplies and tepid demand continued to send prices plunging. Brent crude oil and gasoline futures both posted 48% losses in 2014, making them the worst performers among the 22 commodity markets tracked by the Bloomberg Commodity Index. U.S. oil futures dropped 46% in the year. Brent crude futures settled down 57 cents, or 1%, at $57.33 a barrel on London’s ICE Futures exchange, the lowest level since May 15, 2009. On the...

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U.S. Inflation Watch-November 2014

The Labor Dept. reported yesterday that the index of consumer prices was down 0.3% in November and was up 1.3% year over year vs. 1.7% in October. Much of the decline was due to falling gasoline prices which make up about 5% of the index and were down 11% year over year. This was the biggest one month drop since December 2008. Excluding food and energy core CPI rose 0.1% in November and 1.7% year over year. With gasoline prices expected to fall further this index is most likely on a downward p...

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Oil and Inflation

What will be the impact of the recent oil price decline on inflation and when will it be reflected in the CPI data? The following article talks about the Billion Prices Project, which is forecasting a steep decline in headline inflation numbers. Is there a new deflationary pulse that is beatinge across global economies? Oil is Dragging Prices Down Faster than Official Price Index can Capture (Source: WSJ)...

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U.S. CPI under 2% and poised to cool off

The Labor Department on Wednesday reported that its consumer-price index rose 0.1% in September from August, as did the core CPI, which excludes food and energy prices. That put both measures up just 1.7% from a year ago. Credit Suisse estimates that as a result of falling gasoline prices, by the end of the first quarter the CPI will be up less than 1% versus year earlier, all else being equal. One place there has been inflation is shelter costs, which is primarily rent and imputed rent—wha...

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U.S. Inflation Watch: Price Index for Personal Consumption Expenditures in August-2014

The Fed's preferred inflation measure, which is the price index for personal consumption expenditures increased 1.5% in August over previous twelve months. August 2014 was the 28th straight month this number has been below Fed's 2% target. Excluding volatile food and energy prices, the core PCE indicator has also increased at 1.5% year over year. This has slightly decelerated from 1.6% in July'14. The CPI measure rose 1.7% year over year in Aug'14, which was a marked slowdown from the better th...

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