Year-on-Year and Instantaneous Inflation in May; Food Prices Declining

Headline and core surprise on the downside: m/m 0.2% vs. 0.3% consensus, and 0.0% vs 0.1% consensus, respectively. More interestingly, Cleveland Fed core CPI nowcast for May m/m was 0.30%, actual was 0.16%.

First, a comparison of different measures of headline – y/y, instantaneous, m/m:

Figure 1: Year-on-Year CPI inflation (bold black), instantaneous inflation (T=12, a=4) per Eeckhout (2023) for CPI (tan), month-on-month (green), Source: BLS via FRED, and author’s calculations.

Instantaneous inflation declines to 1.8%, which is below the 2.45% CPI inflation consistent with a 2% PCE inflation.

What about core and supercore measures?

Figure 2: Instantaneous inflation (T=12, a=4) per Eeckhout (2023) for core CPI (blue), chained core CPI, seasonally adjusted by author using X-13 (tan), PCE deflator (pink), CPI supercore (teal). Implied CPI target incorporates the 0.45 ppts CPI-PCE differential over the 1986-2024 period. Source: BLS, BEA via FRED, BLS, and author’s calculations.

In addition to the positive information in the CPI measures, food prices continue to decline.

Figure 3: CPI component – food at home (blue), and Chained CPI component – food at home, seasonally adjusted by X-13 by author (tan), both in logs 2021M01=0. Source: BLS and author’s calculations.

In other words, while official year-on-year food at home inflation is 1.04%, instantaneous is -0.2% (q/q is -0.8% annualized), and chained (seasonally adjusted by author) is -0.7%.

Figure 4: Instantaneous inflation rate (T=12, a=4) per Eeckhout (2023) for food at home (blue), and chained, seasonally adjusted by X-13 by author (tan). Source: BLS and author’s calculations.


9 thoughts on “Year-on-Year and Instantaneous Inflation in May; Food Prices Declining

  1. pgl

    After I noticed Kevin Drum covered this BLS report, I was about to chide you with “get to work”. But you had already done so!

    Now – isn’t it time for the FED to cut interest rates?

  2. pgl

    “food prices continue to decline”

    Wait – Bruce Hall kept telling us that these prices were soaring. Oh hang on – it’s that projected price of beef in 2025. Never mind.

  3. pgl

    Check this out – Faux News is telling its viewers about 50% inflation. All the Bruce Hall tricks on display. Take one good in isolation and calculate the change since January 2021 as if that change was the inflation rates. Seriously clowns – can you cook up a better set of lies?

  4. pgl

    As a child I cheered like crazy for Jerry West on the basketball court. He just died.

    Howard Fineman – who was a terrific journalist – also just died.

  5. Macroduck

    Steady rates from the Fed today. The statement notes modest progress on inflation. The Board expects one 25 basis-point rate cut this year.

    1. pgl

      I was hoping for a rate cut today. Then again, real income and employment have continued to grow.

    1. pgl

      “We’re trying to preserve the integrity of the justice system, and we’ve seen some of these local and state prosecutors have used that system,” Johnson said.

      I thought Johnson was a Christian. So why does he lie so much? All this toadie is doing is giving Trump his Get of Jail for Free card.

  6. pgl

    But what about real wages?
    All employees
    Real average hourly earnings for all employees increased 0.5 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.4 percent in average hourly earnings combined with no change in the Consumer Price Index for All Urban Consumers (CPI-U).

    Over the past 12 months, nominal wages grew by 4.1% while CPI grew by 3.3% so real wages rose 0.8%.

    Now we heard from a now banned troll that real wages did not rise and of course current head troll Bruce Hall has repeated this claim over and over. Yea – our favorite trolls lie even more than their heroes at Faux News.

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