{"id":28035,"date":"2017-11-16T08:08:08","date_gmt":"2017-11-16T13:08:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=28035"},"modified":"2017-11-16T08:08:08","modified_gmt":"2017-11-16T13:08:08","slug":"why-core-inflation-is-rising-what-it-means-for-fed-rate-hikes","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=28035","title":{"rendered":"Why Core Inflation is Rising &#038; What it Means for Fed Rate Hikes"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2017\/11\/15\/why-core-inflation-rose-why-itll-rise-further-and-what-it-means-for-fed-rate-hikes\/\">Why Core Inflation is Rising &amp; What it Means for Fed Rate Hikes<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Yellen was right to brush off \u201ctransitory\u201d factors of \u201clow\u201d inflation.<\/strong><\/p>\n<p>Consumer prices, as measured by CPI for October, rose 2.0% year-over-year. A month ago, CPI increased 2.2%. The Fed\u2019s inflation target is 2%, but it doesn\u2019t use CPI, or even \u201cCore CPI\u201d \u2013 which excludes the volatile food and energy items. It uses \u201cCore PCE,\u201d which usually runs lower than CPI, and if there were an accepted measure that shows even less inflation, it would use that. But it does look at CPI, and there was nothing in today\u2019s data to stop the Fed from raising its target rate in December.<\/p>\n<p>The Core CPI rose 1.8%, up a tad from September\u2019s 1.7% increase. Core CPI has been above 2% for all of 2016 and through March 2017. In the history of the data going back to the 1960s, Core CPI had never experienced \u201cdeflation.\u201d But when Core CPI rates retreated in the spring through August, along with other inflation measures, a sort of panic broke out in the media:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-36865\" src=\"https:\/\/wolfstreet.com\/wp-content\/uploads\/2017\/11\/US-CPI-core-2017-10.png\" alt=\"\" width=\"507\" height=\"368\" \/><\/p>\n<p>But the retreat was repeatedly brushed off as \u201ctransitory\u201d by Fed Chair Janet Yellen and other Fed governors, <a href=\"https:\/\/wolfstreet.com\/2017\/06\/15\/suddenly-hawkish-yellen-brushed-off-dip-in-inflation\/\">starting in June<\/a>, when they vowed to continue raising rates \u201cgradually\u201d and proceed with the QE unwind. Yellen had specifically pointed at a few of those \u201ctransitory\u201d factors. These factors are now turning around. Core prices have re-accelerated their increases.<\/p>\n<p>One of the \u201ctransitory\u201d factors Yellen had pointed out specifically was telephone services, which includes the monthly costs that consumers pay for their smartphones and landlines. Those costs had plunged as a price war among wireless carriers broke out in 2016. This summer, the CPI for wireless services plunged as much as 13% year-over-year. Consumers loved it, but it couldn\u2019t last.<\/p>\n<\/div>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Core Inflation is Rising &amp; What it Means for Fed Rate Hikes Yellen was right to brush off \u201ctransitory\u201d factors of \u201clow\u201d inflation. Consumer prices, as measured by CPI for October, rose 2.0% year-over-year. A month ago, CPI increased 2.2%. The Fed\u2019s inflation target is 2%, but it doesn\u2019t use CPI, or even \u201cCore [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[16209,172,303,426,4800,3650,4254,4255],"class_list":["post-28035","post","type-post","status-publish","format-standard","hentry","category-economics","tag-core-inflation","tag-cpi","tag-fed","tag-inflation","tag-inflation-target","tag-us-federal-reserve","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28035","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28035"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28035\/revisions"}],"predecessor-version":[{"id":28036,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28035\/revisions\/28036"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28035"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28035"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28035"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}