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Benign inflation? Not as I see it

Posted By Peter Boockvar On December 15, 2010 @ 10:00 am In MacroNotes | Comments Disabled

Headline Nov CPI rose .1% (expectations up .2%) as did the core rate (in line). The y/o/y gain is up 1.1% and the core is up .8%. Benign inflation right? Not. The absolute CPI price index (aka cost of living) is now at the 2nd highest reading on record at 218.88 seasonally adjusted, just a hair off the all time high of 219.10. The core rate, which the Fed loves to focus on, is at an all time record high. The Fed said this yesterday, “measures of underlying inflation are somewhat low…” The rate of change may square with this but the absolute level certainly does not. Sorry for the digression from the details of the report but this talk of deflation and Fed actions in response doesn’t square with the reality that we experience everyday in what we purchase. OER and vehicle prices kept a lid on the figures and commodity prices rose just .1%.


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