Key Fed inflation measure rose 0.6% in January, more than expected
Source: CNBC
A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices.
The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago, the Commerce Department reported Friday. Wall Street had been expecting respective readings of 0.5% and 4.4%. The core PCE gains were 0.4% and 4.6% in December.
Including the volatile food and energy components, headline inflation increased 0.6% and 5.4% respectively, compared to 0.2% and 5.3% in December.
Markets fell following the report, with the Dow Jones Industrial Average off around 500 points in morning trading.
Read more: https://www.cnbc.com/2023/02/24/key-fed-inflation-measure-rose-0point6percent-in-january-more-than-expected.html
Wanted to add where the fed is with interest rates at post time - https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
Shows the daily level of the federal funds rate back to 1954. The fed funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis. The Federal Open Market Committee (FOMC) meets eight times a year to determine the federal funds target rate. The current federal funds rate as of February 22, 2023 is 4.58%.
Article updated.
Original article -
The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago, the Commerce Department reported Friday. Wall Street had been expecting respective readings of 0.5% and 4.4%. Including the volatile food and energy components, headline inflation increased 0.6% and 5.4% respectively.
Markets fell following the report, with futures tied to the Dow Jones Industrial Average off more than 300 points. Consumer spending also rose more than expected as prices increased, jumping 1.8% for the month vs. the estimate for 1.4%. Personal income rose 1.4%, higher than the 1.2% estimate. The personal saving rate increased, rising to 4.7%.
All of the numbers suggest inflation accelerated to start the new year, putting the Fed in a position where it likely will continue to raise interest rates. The central bank has pushed benchmark rates up by 4.5% since March 2022 as inflation hit its highest level in some 41 years.
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Example: last week, 1 bag bagles $4.68 Walmart. Aldi $1.98.
Ridiculous price gouging on food! 
Only other option in this region (within 30 miles) is Kroger. That's as bad or worse than Walmart for prices.
And if you don't have a quarter, a cashier will give you one.
Significant savings & great products!
One thing I always get is 1/2 gallons of iced coffee. $2.99 at Aldi, nearly $5 at Kroger & Walmart. Super yummy mocha! 
Salsa for large bottle is $1.99. Everywhere else, nearly $5.
Everything there is that way.
You also must provide or buy your own bags & pack your own groceries. I prefer to pack my own.
No membership.
Let us know what you think if you try it.
I've only had to use it a couple of times & it worked just as they say it does.
I've never seen unhappy emoyees in the ones I've shopped at, but to each their own.
Krogers pays $7.50 per hour & all employees are clearly miserable. Walmart isn't much better. My only other 2 choices here.
Just to be clear, this isn't cherry-picked data where I only included the boom periods. No, this is the whole enchilada -- good periods, bad periods, indifferent periods.
People have been screeching bubble bubble bubble non-stop for centuries. When the stock market dares go up, "it's a bubble". When it goes down, "See I told you so". That's what makes them the smartest people in the room. Heads I win, tails you lose. So while they always win the rhetorical wars with this unbeatable formula, I prefer being stupid and having money instead.
Over the past 20 years, it has grown 6.3710 fold, an average annual increase of 9.7%/year
Over the past 50 years, it has grown 131 fold, an average annual increase of 10.2%/year
and so on.
This is from the below link, which also has similar for bonds, Treasury bills, and gold. These don't come close to matching the increase in equities.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
Simulation after simulation by countless authors and organizations show one is more likely to exhaust their nest egg if it is all in fixed income like bonds and CDs than if it is majority equity. Nothing holds up as well in the face of withdrawals and inflation than does equities, except perhaps real estate. In other words, it's an even bigger gamble to not have a sizable proportion in equities.
That said, being an old person, I hedge by having about 40% of my easily re-investible assets in bonds and other fixed income. On top of that, I have an annuity, Social Security income, my house -- all non-equity investments or sources of income. So I'm far from being an "all equities" fanatic.
Last edited Sat Feb 25, 2023, 02:17 AM - Edit history (8)
From the news release, http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm
From the preceding month, the PCE price index for January increased 0.6 percent (table 9). Prices for goods and services both increased 0.6 percent as well. Food prices increased 0.4 percent and energy prices increased 2.0 percent. Excluding food and energy, the PCE price index also increased 0.6 percent. Detailed monthly PCE price indexes can be found on Table 2.4.4U.
From the same month one year ago, the PCE price index for January increased 5.4 percent (table 11). Prices for goods increased 4.7 percent and prices for services increased 5.7 percent. Food prices increased 11.1 percent and energy prices increased 9.6 percent. Excluding food and energy, the PCE price index increased 4.7 percent from one year ago.
And they show the last 5 months. I found the latest 12 months (and way beyond) at FRED:
PCE: https://fred.stlouisfed.org/series/PCEPI
CORE PCE: https://fred.stlouisfed.org/series/PCEPILFE
PCE Inflation (just came out today, February 24):
PCE, rolling 3 month averages, annualized
7.2% 7.3% 7.4% 6.2% 4.8% 2.1% 4.2% 3.8% 3.2% 4.0%
CORE PCE, rolling 3 month averages, annualized
4.3% 4.3% 5.4% 4.4% 5.1% 4.5% 5.4% 4.0% 3.6% 4.7%
Consumer Price Index (CPI)
CPI - https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
CORE CPI - http://data.bls.gov/timeseries/CUSR0000SA0L1E&output_view=pct_1mth
(Choose "More Formatting Options" at the upper right of the page for other views such as rolling averages of past 12 months, past 6 months, past 3 months)
Producer Price Index (PPI)
OLD CORE PPI - Producer Price Index, seasonally adjusted - Final demand goods less foods and energy -
http://data.bls.gov/timeseries/WPSFD413?output_view=pct_1mth
CORE PPI - Producer Price Index, seasonally adjusted - Final demand less foods. energy. and trade services - This is the core measure that the BLS features, so I will follow their lead
http://data.bls.gov/timeseries/WPSFD49116?output_view=pct_1mth
(Choose "More Formatting Options" at the upper right of the page for other views such as rolling averages of past 12 months, past 6 months, past 3 months)
Why the Fed thinks core is better for forecasting future inflation: https://www.democraticunderground.com/10143025190#post10
3 months annualized: Core CPI: 4.58%, Core PPI: 4.63%, Core PCE: 4.75%
I chose 3 months for its recency, but that it's still a longer period than one month, so less likely that one can dismiss it as a "one off", as some are trying to do.
To me, there's no way to look at any of these graphs without getting the impression that while inflation is down from the first half of 2022, the last 6 months are showing, at best, a consolidation at more than double the Fed's 2% target. Slightly less optimistically, inflation has been rewarming in the past 6 months.
The latest one-month numbers -- January numbers as reported mid-February (Feb 24 for PCE) -- aren't good either:
Core CPI: 5.06%, Core PPI: 7.27%, Core PCE: 7.07%
CPI: 6.38%, PPI: 8.18%, PCE: 7.69% annualized rates using the actual index numbers
Stocks, Treasury yields, and more (OMG!) : https://finance.yahoo.com/
Last edited Sat Feb 25, 2023, 05:05 PM - Edit history (3)
It all points to a Core PCE that is a bit more than double the Fed's target. Before January's number, one could argue there's been a very slow downward tilt over the last 6-8 months. With January's number, it's more like a flatlining.
Some may say that January is an anomalous "one off" on the high side. Others may say that December is an anomalous "one off" on the low side that January corrects.
There's a lot of chatter about the "no landing" scenario -- that inflation continues to stay elevated like in the graphs. I think with just a quarter percent rate hike on March 22, and another quarter point increase on May 3, that will likely continue to be the case for a long time.
With the hawkish noises from several FOMC members since the mid-month CPI and PPI reports, and more since yesterday, I think a half percent rate hike in March is a better bet. Note that before the March 22 FOMC meeting, new CPI and PPI reports will be released. (The next PCE report is March 31).
GRAPHS: The "x" axis is the month of the year, where the "1" is January 2022, "12" is December 2022, and "13" is January 2023.
All of the percentage increases are annualized numbers
On the rolling 3 month one can say its been flatlined since April 2022 at around 4.5%, with wiggles
The rolling 6 month - one can say its been flatlined since January 2022 at close to 5%, with wiggles
The rolling 12 month average has basically flatlined since July to about 4.7%.
I've always been a severe critic of 12 month inflation numbers when assessing RECENT or CURRENT inflation, but provide it for comparative purposes.
CORE PCE, which is shown in the above graphs: https://fred.stlouisfed.org/series/PCEPILFE
(PCE is at: https://fred.stlouisfed.org/series/PCEPI )
Percentages are calculated from the actual index numbers, not on averaging one-significant-digit numbers.
At 4.5% inflation, the value of a dollar drops to 50 cents in just 16 years.
