U.S. inflation jumps again and hits 6.4% rate, the Fed's favorite price gauge shows

[mahatmakanejeeves]

Source: MarketWatch

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U.S. inflation jumps again and hits 6.4% rate, the Fed's favorite price gauge shows

Last Updated: March 31, 2022 at 9:42 a.m. ET
First Published: March 31, 2022 at 8:37 a.m. ET
By Jeffry Bartash

PCE price index rises 0.6% in February

The numbers: The Federal Reserve's favorite inflation calculator rose a sharp 0.6% in February and kept the increase over the past year at a 40-year high, explaining why the central bank plans to move faster to raise U.S. interest rates.

The so-called personal consumption price index climbed to 6.4% in the 12 months ended in February, up from 6.2% in the prior month, the government said Thursday. ... That's the steepest increase since January 1982. ... The better known consumer price index rose by an even higher 7.9% in the 12 months ended in February.

Key details: A narrower measure of inflation that omits volatile food and energy costs, known as the core PCE, rose by 0.4% in February. ... The increase was the smallest in five months and matched the forecast of economists polled by the Wall Street Journal. ... Still, the rise in the core rate in the past year rose to 5.4% from 5.2%, reflecting the largest gain since 1983.

The Fed views the PCE index -- the core rate in particular -- as the most accurate measure of U.S. inflation. It's more comprehensive and takes into account when consumers substitute cheaper goods for more expensive ones -- say ground beef for filet mignon or tofu for chicken.

{snip}

Read more: https://www.marketwatch.com/story/u-s-inflation-jumps-again-and-hits-6-4-rate-the-feds-favorite-price-gauge-shows-11648730285

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{edited to clarify some things}

Please note that we're talking about annual rates. Also, there are three different indices involved.

>>>>>>
The numbers: The Federal Reserve's favorite inflation calculator rose a sharp 0.6% in February and kept the increase over the past year at a 40-year high, explaining why the central bank plans to move faster to raise U.S. interest rates.

The so-called personal consumption price index climbed to 6.4% in the 12 months ended in February, up from 6.2% in the prior month, the government said Thursday. ... That's the steepest increase since January 1982. ... The better known consumer price index rose by an even higher 7.9% in the 12 months ended in February.
>>>>>>

The PCE index rose 0.6% in the month of February 2022. When you look at prices in February 2022 and go back to compare them to prices in February 2021, you will see that the PCE rose by 6.4% for the year. From January 2021 to January 2022, the PCE increased by 6.2%.

Another index, the consumer price index, "rose by an even higher 7.9%" from February 2021 to February 2022.

The third index is the core PCE, which is a "narrower measure of inflation that omits volatile food and energy costs ..."

MarketWatch was careful to note that we are looking at annual rates. Not all sources chose their words as carefully as MarketWatch.

[NCjack]

1. We need some anti-trust action -- NOW!

[lagomorph777]

2. How is a drop from 7.9% to 6.4% called a "jump"?

WTF - seriously this is egregious mis-reporting.

[FBaggins]

6. It wouldn't be. But that isn't what happened

The 7.9 and 6.4 are differing measures of inflation - both for the month of February.

[Shermann]

3. The February inflation rate was 7.9%, so it would also be correct to say the inflation rate dropped

[FBaggins]

5. These are both February numbers

One is PCE and the other is CPI.

[Shermann]

8. I see, my mistake. nt

[mahatmakanejeeves]

4. Key Fed Inflation Rate Hits 40-Year High; S&P 500 Slips

ECONOMY

Key Fed Inflation Rate Hits 40-Year High; S&P 500 Slips

JED GRAHAM 09:45 AM ET 03/31/2022

The inflation rate most closely watched by the Federal Reserve showed that price pressures accelerated to a new 40-year high, but prices excluding food and energy were a bit tamer than expected. The stock market didn't move much on the mixed personal consumption expenditures (PCE) price index, with the S&P 500 falling modestly after a Thursday's opening bell.

The PCE price index rose 0.6%, the biggest monthly gain since 2008. The annual inflation rate rose to 6.4%, highest since January 1982. Core prices, minus food and energy, rose 0.4% on the month. The annaul core inflation rate picked up to 5.4%, the most since April 1983.

Also on Thursday, the Labor Department said new claims for jobless benefits rose 14,000 to 202,000 in the week through March 26. However, layoffs are at historically very low levels. The prior week saw initial jobless claims hitting a 50-year-low 188,000. For perspective, the last time jobless claims were so low, the ranks of the employed were less than half of current levels.

Like a too-strong putt that overshoots the hole by a ways, today's inflation-rate update and tomorrow's jobs report could test the nerves of this S&P 500 rally. ... The stock market rally is built on hope that the Federal Reserve can rein in inflation without tipping the U.S. economy into a recession. But that sanguine outlook depends on how much and how fast the Fed has to tighten monetary policy. Scoring this week's data vs. some key markers laid out in the latest Fed economic projections will provide a guide as to how the Fed's hoped-for "soft landing" is shaping up.

{snip}

[Chainfire]

7. The same people who control the economy control politics.

Expect food and fuel prices to keep rising until the elections. It is a double win for Republicans. All of us have to eat and many of us have to drive. The real pain of the prices is born by the the people that Republicans care the least about.

[onenote]

11. So why didn't inflation spike before the 2012 and 2016 elections? Why were gas prices low in 2016?

[mahina]

12. I recall gas prices rise sharply during President Obama's

One of his terms, and thinking since there was no reason for it that it was the oil companies moving to make him unpopular.

The Republicans never stopped trying to make him unpopular. They are trying to drag him down by even a half a point or one point seems like every day.

[onenote]

13. Gas prices fluctuated during Obama's term. And Bush's. And Trump's. And so on.

In January 2001, when Bush was inaugurated, price of gas was $1.487... in June 2001, the price was 1.658...in December 2001 it was 1.127 but as the 2002 midterms approached in September 2002, it was back up to $1.486. And as the 2004 election approached, it was all the way up to $1.912 in September 2004. So were the oil companies trying to make Bush unpopular and make Kerry more likely to win? Really?

And by the run up to the 2008 election, the price (July 2008) was $4.114 -- because the oil companies wanted Obama to defeat McCain? Of course the price dropped after Obama was elected -- all the way down to $1.84 in January 2009. Then it climbed back up again, but it never reached the level it had been at when Bush was president. Overall, the price range during Obama's eight years in office was from $3.96 in May 2011 to $1.872 in January 2016.

These fluctuations (and the graph shows how the price roller coasters) had more to do with things like the 9/11 attacks, the great recession, and other changes in economic conditions generally, not some planned attempt to make any particular president popular or unpopular.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epm0_pte_nus_dpg&f=m

[mahina]

14. Rats, I just spent 10 minutes replying to your post

And the page refresh kicked me out and I don’t have patience to start all over again.

Obviously world events and many factors way on the cost of oil per barrel. I’m curious about the difference between the crude oil prices and prices at the pump.

I realize that when oil was trading for $50 a barrel or even briefly $0 a barrel in the height of the pandemic, gas prices would be expected to go down.

They didn’t go down nearly as much proportional to the decrease in crude and they have gone up proportionally much higher. Yesterday gas was over five dollars a gallon at Costco! Brent crude closed at 112/barrel.

Do you think that it makes sense for gasoline to be five dollars plus a barrel at Costco when oil is in the 100-112 range? Or could President Biden, Robert Reich, Bernie Sanders and others be right that this is excessive profit taking?

It’s a double win for them.

Are you able to find a good graph that contains data for the price per barrel and gas prices over time? I realize gas prices vary across the country and across the street but there has to be a way to see those data relationships and I’m out of morning.

Thanks. Stay positive. 🤙🏼

[mahina]

15. Also, thanks for the link because I never even knew that that office existed.

I recall the Department of Energy is mainly involved in our nuclear assets.

I’ll explore this later. Mahalo.

[mahina]

16. Ps yes, the run up to the 2008 election

Was exactly it.

When you shared “And by the run up to the 2008 election, the price (July 2008) was $4.114 -- because the oil companies wanted Obama to defeat McCain?”

I thought then that they wanted to hurt President Obama’s chances, not McCain’s.

[mahatmakanejeeves]

9. U.S. Inflation Rises to 40-Year Peak in February by Fed's Preferred Measure

ECONOMY | U.S. ECONOMY

U.S. Inflation Rises to 40-Year Peak in February by Fed’s Preferred Measure

Elevated inflation readings keep pressure on central-bank officials to raise interest rates

By Gwynn Guilford
https://twitter.com/sinoceros
[e-mail]
Updated March 31, 2022 10:29 am ET

Inflation reached a new 40-year peak in February, according to the Federal Reserve’s preferred gauge, buoyed in part by a surge in oil prices related to Russia’s invasion of Ukraine combined with other supply problems and strong U.S. consumer demand.

The Commerce Department said Thursday that its personal-consumption-expenditures price index climbed 6.4% in February from a year ago, faster than the 6% increase in the year ending in January. The February rise was the fastest since 1982.

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[The Wizard]

10. The inflation is

an adjustment from the deflation caused by the pandemic. Not all that unusual like the media makes it out to be.

[DallasNE]

17. The Key Sentence In The Report Reads

"The increase (in core inflation) was the smallest in five months". Translation, inflation is now showing signs of receding and that is great news. And shows the bias in the headline on the report, making good news sound like bad news.