Latest Breaking News

I went on and on in post#3 about how the 12-month average was tame looking in today's February report -- for example:

I'll just repost the CORE set of graphs, and I'll focus on the CORE, which is what the Fed uses to project FUTURE inflation (but the story is pretty much the same for the regular PCE too).



What fell out of the 12-month window was a 0.448% increase from January to February 2025 (5.51% annualized), so a 0.367% increase in January to February of this year, the latest, entering the 12-month window, together with what fell out of the window, actually resulted in a 0.1 percentage point DECREASE in the reported 12-month number, from 3.1% to 3.0%.

(I'm using the actual index numbers for more accuracy. The BEA does the same thing, but rounds the end result to the nearest 0.1%).

Well, now guess what happens in March? Look at the graph at the March 2025 number. It's only a tiny 0.097% increase from February to March (1.18% annualized). Anyway that drops out of the 12-month window in the March report.

Suppose the next report is that a very mild 0.2% month-over-month increase occurs February to March. That enters the 12-month window. The result is that, even with such a mild increase, the reported 12-month increase rises again by 0.1 percentage points to 3.1%

If February to March is a mild (by today's and the media's standards) 0.3%, then the reported 12-month increase rises by 0.2 percentage points to 3.2%

If February to March rises the same 0.4% that it rose from Jan to Feb, then the reported 12-month increase rises by 0.3 percentage points to 3.3%

We haven't even gotten into fuel price and knock-on price surges as a result of the current Iran war that started Feb 28. Let's say that causes a 0.6% February to March rise. Then the reported 12-month increase rises by 0.5 percentage points to 3.5%

Remember we're talking about the CORE PCE which doesn't have food or energy, so it would be the "knock-on" price increases that would show up in CORE inflation in the March report.

As for the regular, aka "all items" PCE, which include food and energy, the February to March rise is likely to considerably more, along with the 12-month number.