The CPI report for June was released this morning and it's nothing but good news.
Headline inflation is at 2.2% and dropping, while core inflation finally cracked and is now down to 1.9%. Inflation is literally running at the rate the Fed wants it to.
If you insist on wanting to know the conventional year-over-year figures, they were 3.1% for headine CPI and 4.9% for core CPI. But all this does is incorporate high inflation from the second half of last year into this year's lower figures, so why would you do that?
In other news, as foreshadowed last night, if you remove shelter from core inflation then CPI is literally zero:
Inflation news is spectacular this month. We just needed a little patience, that's all.
See?! ANOTHER failure of Bidenomics! Why doesn't Joe Biden CARE about all the Hard-Working Americans who DEPEND on steady inflation? Like, um ... econometricians! Yeah! And also oil company executives! And shareholders! Why doesn't Joe Biden care about THEM?!??!
You know Ralph Nader, God Bless Him, has made this argument 🙂 There's Seniors out there who need higher interest rates on their bank accounts! Curse the Democrats for their 0.2% bank account rates!
Although that being said, I do have a friend who retired in his early 40's, and managed to catch the end of the early 80's inflation period by buying a significant amount of 30 year treasuries at 10%. Worked out really well for him, but it's kind of hard to count on catching the rates at the right time.
This is a great report!
But usually you caution not to put too much emphasis on any one month - doesn't that still apply?
"But all this does is incorporate high inflation from the second half of last year into this year's lower figures, so why would you do that?"
This is simply false. For the 5 months in 2023 before June, core CPI ran at an annual rate of 5.14%. For the last 6 months of 2022, it ran at...5.13%. Those are, you'll note, basically the same number.
We've got 11 months of 5.13% and one month of 1.91%. Maybe it's a bit early to declare victory?
The trend has been all moving in the same direction ( down) for the last 12 months. Its misleading to try to present the data in a way to imply that absent the most current month, inflation has been stuck in a persistant high state.
The most recent 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 month rates of inflation are lower than the 1,2,3,4, etc month rates that preceded it. The decreases have been consistent, even with lagging shelter costs misrepresenting how dramatic the decrease have been.
The all- items index shows an even more dramatic fall.
"Its misleading to try to present the data in a way to imply that absent the most current month, inflation has been stuck in a persistant (sic) high state."
Kevin claimed that the only reason the year-over-year number is high is because of the "high inflation from the second half of last year."
But that's essentially the same as the rate of core inflation for the first 5 months of this year. His claim was that inflation from the end of 2022 was distorting the year-over-year number, but that's plainly not the case - the first five months of 2023 saw the same annualized rate of inflation as the second half of 2022.
What on earth is misleading about that?
I agree that the trend is down! This was a great report! There's no need to make false claims to support that, is all I'm saying.
Plainly this is correct. For one month, the core inflation rate has been at the Fed's target. Great! For the preceding couple of years, it was regularly too high, and it had not even been trending down since last fall.
Exogenous inflation ---> ZLB
GO TEAM Transitory!!!
😉
The inflation rate is exactly where it should be. No more rate hakes!
Naturally the propagandists on the right have reverted to claiming the figures are made up bullshit by the Biden administration. They don't explain why the administration didn't simply publish made up figures from the start.
Kevin, could you write a post about the perils of deflation? These charts point worryingly in that direction.