by Bill McBride on 3/15/2013 12:34:00 PM
Friday, March 15, 2013
The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.9% annualized rate) in February. The 16% trimmed-mean Consumer Price Index rose 0.2% (2.6% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.Note: The Cleveland Fed has the median CPI details for February here. Motor fuel increased at a 180% annualized rate in February! That was a sharp increase, but prices have fallen a little in March.
Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.7% (8.5% annualized rate) in February. The CPI less food and energy increased 0.2% (2.1% annualized rate) on a seasonally adjusted basis.
Click on graph for larger image.
This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.2%, the trimmed-mean CPI rose 1.9%, and the CPI less food and energy rose 2.0%. Core PCE is for January and increased 1.3% year-over-year.
On a monthly basis, median CPI was at 2.9% annualized, trimmed-mean CPI was at 2.6% annualized, and core CPI increased 2.1% annualized. Also core PCE for January increased 1.8% annualized.
The Fed has been clear that their 2% inflation target is not a ceiling, and that they will tolerate some short term increases in inflation as long as the unemployment rate remains elevated and inflation expectations remain "well anchored". From the recent FOMC statement: "the Committee ... currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored".
The Fed will meet next week, and with this level of inflation and the current high level of unemployment, I expect the Fed will keep the "pedal to the metal".
Posted by Bill McBride on 3/15/2013 12:34:00 PM