Inflation Is Still Low

The government released the Consumer Price Index report for May, and it showed that inflation is still very low. Headline inflation rose by just 0.15% last month. That’s the seasonally adjusted number, which had actually fallen in March and April. Over the last seven months, seasonally adjusted inflation has risen by an annualized rate of 0.15%. Over the last three months, the annualized rate is -1.6%.

The “core rate,” which excludes food and energy prices, rose by just 0.167% in May. Annualized, that’s almost exactly 2%.

The Fed begins its big two-day meeting today, and this morning’s CPI continues to show that inflation is not a problem. In fact, inflation is running below the Fed’s target. This is why I think fears of the Fed tapering are greatly exaggerated.

Posted by on June 18th, 2013 at 8:52 am


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