Inflation

In the second quarter inflation fell to 0.8 %, this from an upward-revised 1.4% in the first quarter. The lowest level on record for Core PCE inflation is 0.7 %. That was in the first quarter of 2009. Core PCE touched 0.7 % twice in the early 1960s, that is as far back as the data go.

“Although inflation remains well below Fed’s 2 % target, some signs that it is bottoming out. The core PCE index rose 0.22 % in June, and the year-to-year rate is now back up to 1.22 % from the 1.06 % reported a couple of months ago (mostly because of revisions). Over the next few months, inflation is likely to edge up. PCE health care service prices are likely to rebound from the first outright quarterly drop in over 50 years, and the hurdle for an increase in the year-to-year rate is low because we are dropping out very weak sequential inflation readings in 2012Q3.” (Goldman Sachs)

Core PCE Inflation

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s