“Consumer prices rose at the fastest pace in 30 years for September” according to a Wall Street Journal feature about the price index for personal consumption expenditures (PCE). At first glance, that sounds even scarier than equally misleading reports about the same month’s consumer price index (CPI) hitting a 13 year high. Both claims were based on comparing the level of prices with those of September 2020, not changes over the past six months.
Claiming the PCE index of consumer prices “rose at the fastest pace in 30 years” sounds as if prices in rose in September at a faster rate than in any other month for the past 30 years, and certainly faster than any other month this year. Yet the article later mentions that “the index was up 0.3% in September from the previous month. Excluding food and energy categories [the core PCE] … the index rose 0.2%.” Those modest increases were back down the January lows, and far below the March to August monthly average of 0.5% increases for both headline and core inflation.
The genuinely interesting inflation news went unreported. It is that the Fed’s favorite core PCE inflation has slowed every month for five months: 0.62% in April, 0.59% in May, 0.48% in June, 0.34% in July, 0.26% in August and 0.21% in September. Rather than hitting a record 30-year high in September, core inflation in September was at a six-month low.
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