How About an Easy Look at August Inflation?

In a desperate attempt not to write about Ukrainegate for the moment, how about a look at the latest inflation figures? Exciting! First off, here’s the Wall Street Journal explanation of what happened:

U.S. inflation slowed in August after a pickup in the previous month…The Federal Reserve’s preferred inflation gauge, the personal-consumption-expenditures price index, rose a seasonally adjusted 0.03% last month from July, the Commerce Department said Friday, its smallest gain since January. The so-called core index, which strips out volatile food and energy components, rose 0.14% in August.

The sluggish gains last month kept inflation well below the Fed’s annual target of 2%. Compared with August 2018, the main index was up 1.44%—the same as in July—although core inflation stood at 1.77%, its highest level since January. Friday’s figures contrast with other data showing that inflationary pressures are building in the U.S. after a very weak start to the year.

Did you get that? Inflation slowed, with core inflation of 0.14 percent in August. This is well below the target rate of 2 percent, which is not surprising since it’s a one-month number and the target rate is an annual number. You can’t compare them. Then we learn that core inflation actually stood at 1.77 percent year-over-year, its highest level since January. But 0.14 percent in a month is the same at 1.77 percent in a year. So why is the former “sluggish” while the latter is “the highest level since January”? They’re the same thing!

Does this make any sense to you? It doesn’t to me. Instead, how about if we stick with one measure—PCE core inflation on an annual basis—and see how it’s doing:

The answer is: not much. There’s a slight upward trend since the end of the Great Recession along with a lot of noise. We’ve seen three consecutive months of rising core inflation, but that’s obviously meaningless noise at the point.

So that’s the analysis: we’ve seen a slight increase over the past three months, but overall core inflation remains well under control and well under the Fed’s 2 percent target. End of story.

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THE TRUTH...

is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

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