We are no longer headed for the ‘last mile’ of inflation
inflation Accelerated for 4 consecutive months February confirmed the momentum in price growth, further undermining the Federal Reserve’s case for rate cuts this year.
of consumer price index (CPI) rose 0.4% from January, one step higher than the previous month’s 0.3%. Currently, it has been rising every month since November. run 4 times faster Like in October.
Compared to 12 months ago, Overall CPI increased by 3.2%This is a faster growth than the previous month’s 3.1% year-over-year growth. Wall Street had expected the 12-month figure to remain at 3.1%.
When discussing inflation, it is often helpful to annualize the most recent numbers. The 12-month figure is what gets reported in the headlines and is probably psychologically and politically significant.But it is backwardstells us how long inflation has been hot, rather than how hot inflation is.
Annualizing more recent numbers can also help put things into perspective. The growth rate in February was very high at 5.4% per year. Highest annual rate since August last year. The annualized inflation rate for the past three months is an increase of 4%. Annualized over 6 months is 3.2%.
That progress is important. On an annualized basis, 1 month is greater than 3 months, 3 months is greater than 6 months, and 6 months is greater than 12 months.That is, it is Inflation trends are not only trending upward, they are rising faster.. The disinflation story ended about eight months ago and we now appear to be in a new wave of inflation.
as Jim Bianco Bianco Research and ben hunt The epsilon theory folks point out that disinflation is over.
“The downward trend in inflation ended eight months ago (red bar, top panel), just as Wall Street invented the term to describe falling inflation. “Last Mile” (Black line, bottom panel),” Bianco tweeted on Tuesday. “The ‘last mile’ hasn’t existed since Wall Street started using the term last summer. We’re now in Wall Street’s ninth month without even realizing that this narrative isn’t working. is entering.”
Nowcasting is predicting that the event that just happened will happen.
Forecasting is predicting that something will happen that has not happened before.
Wall Street continues to “nowcast” that inflation is falling. It’s already happened, but it’s not going to happen.
The downward trend in inflation ends in 8 months… https://t.co/WoZ4mTICa4 pic.twitter.com/RkhPRX8t7z
— Jim Bianco (@biancoresearch) March 12, 2024
Core inflation is heating up and commodity inflation is returning.
Core inflation was surprised by the upside. It rose by 0.4% from the previous month, and the forecast was for a 0.3% rise. This matched January’s numbers. Before rounding, inflation rose by 0.358% in the month, slightly lower than January’s figure, at an annualized rate of 4.4%.
progress of annualized value tell the same story about rising and accelerating trend. The 3-month core annual percentage rate is 4.2% and the 6-month core annual percentage rate is 3.9%. Both are higher than the 12-month core figure of 3.8%.
There is little sense of security in core services other than housing-related services, so-called services. “Super Core”-Fed officials say they are watching closely. It rose 0.5% in February (0.47% before rounding) and rose 4.5% over the past 12 months. This is lower than January’s red-hot figure of 0.9% (0.85% without rounding), but the trend of the annualized figure shows the same thing. The three-month annualized rate of 6.4% is higher than the six-month annualized rate of 5.8%, and both are higher than the 12-month annualized rate. -Month number.
In last night’s Breitbart Business Digest, we noted that: January producer price index (PPI) indicates an increase in inflationary pressure in the goods sector, which is likely due to The financial side of the CPI will show an increase. This was a departure from consensus, as Wall Street analysts had been predicting further declines in commodity prices in January.
We were right. February’s CPI report shows: Core goods prices rose 0.1%This was the first increase since May last year. Although the prices of core goods are still falling year-on-year, the return of price increases means that Commodities can no longer be relied upon to put downward pressure on overall price levels.
Wall Street analysts still maintain that the disinflation story is “intact.” it’s not. The economy is growing at a solid pace and the labor market is strong enough to provide inflationary pressures. The Biden administration’s budget deficit continues to fuel excess demand without doing much to expand supply. Inflation is on the rise again and there is a risk of significant overheating. This will likely force the Fed to refrain from cutting rates in June or July, and probably not until the end of the year.
