With disinflation concerns front and center, measures of price stability are under heavy scrutiny. Today's CPI figures had a Goldilocks feel to them, not too warm but not too cold. Both headline and core price levels rose 0.1% for the month, a pace that equates to 1.2% annualized. For the prior twelve months, the CPI held steady at 1.7%.
The chart below shows the trend in the CPI. After inflation slowed in July and August, many became concerned about disinflation taking a firm grip on the US economy. That could still be the case but at least today's CPI figures show some stability. The mild trend higher in prices was the result of a few factors moving in opposing directions. Food and housing costs rose, but energy helped offset the increases elsewhere.
The benign reading on inflation gives the Fed additional leeway with regard to monetary policy. Without sharply rising inflation, there is ... Log in or subscribe to continue reading.