The headline screams Fed’s inflation measure soars by most in 30 years. The lede then cries out

The Core Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation measure, accelerated last month by the most on an annual basis in 30 years.


Core PCE, which excludes food and energy, rose 3.6% year over year in July, according to the Bureau of Economic Analysis, the most since 1991.

2020 is an aberrational year, though, with its economic dislocation caused by government fiat rather than by economic forces. All comparisons with 2020 should come with an asterisk.

A better comparison is with 2019, the last year prior to the government’s interference. Core CPE rose only around 2.4% per year compared to those two years ago, according to my third-grade arithmetic and data from FRED (with the graph adjusted to start 2019-01-01), roughly in line with the Fed’s target of 2%.

That’s a rate worth watching, but it’s nothing to get excited over. It’s also the case that, within the current year, month-over-month inflation may be decreasing. It’s too early for this to be taken as a serious trend, but it also bears watching.

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