Headline and core surprise on the downside: m\/m 0.2% vs. 0.3% consensus, and 0.0% vs 0.1% consensus, respectively. More interestingly, Cleveland Fed core CPI nowcast for May m\/m was 0.30%, actual was 0.16%.<\/p>\n
First, a comparison of different measures of headline \u2013 y\/y, instantaneous, m\/m:<\/p>\n
Figure 1: Year-on-Year CPI inflation (bold black), i<\/strong>nstantaneous inflation (T=12, a=4) per\u00a0Eeckhout (2023)<\/a> for CPI (tan), month-on-month (green), Source: BLS via FRED, and author\u2019s calculations.<\/em><\/p>\n Instantaneous inflation declines to 1.8%, which is below the 2.45% CPI inflation consistent with a 2% PCE inflation.<\/p>\n What about core and supercore measures?<\/p>\n Figure 2:<\/strong>\u00a0Instantaneous inflation (T=12, a=4) per\u00a0Eeckhout (2023)<\/a> for core CPI (blue), chained core CPI, seasonally adjusted by author using X-13 (tan), PCE deflator (pink), CPI supercore (teal). Implied CPI target incorporates the 0.45 ppts CPI-PCE differential over the 1986-2024 period. Source: BLS, BEA via FRED, BLS<\/a>, and author\u2019s calculations.<\/em><\/p>\n In addition to the positive information in the CPI measures, food prices continue to decline.<\/p>\n Figure 3:<\/strong> CPI component \u2013 food at home (blue), and Chained CPI component \u2013 food at home, seasonally adjusted by X-13 by author (tan), both in logs 2021M01=0. Source: BLS and author\u2019s calculations.<\/em><\/p>\n In other words, while official year-on-year food at home inflation is 1.04%, instantaneous is -0.2% (q\/q is -0.8% annualized), and chained (seasonally adjusted by author) is -0.7%.<\/p>\n Figure 4:<\/strong> Instantaneous inflation rate (T=12, a=4) per\u00a0Eeckhout (2023)<\/a> for food at home (blue), and chained, seasonally adjusted by X-13 by author (tan). Source: BLS and author\u2019s calculations.<\/em><\/p>\n \u00a0<\/p>\n<\/p><\/div>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2024\/06\/inflpix_may24.png\")
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