Today, the Bureau of Labor Statistics released the Consumer Price Index (CPI) figures for April. Before seasonal adjustments, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.61% over March 2008 and by 3.94% compared to April 2007 and core CPI-U (less food and energy) increased by 0.09% over March 2008 and by 2.26% over April 2007. With seasonal adjustments, CPI increased by 0.21% over March 2008 and by 3.88% compared to April 2007 and core CPI-U (less food and energy) increased by 0.10% over March 2008 and by 2.27% over April 2007. Economists had forecast that CPI would rise by 0.3% and core CPI would rise by 0.2%.
Inflation continues to be one of two tales. Core inflation looks to be contained whereas inflation including food and energy prices remains high.
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3 comments:
Really nice charts. FYI, actual housing prices were removed from the CPI starting in 1983. Owner's equivalent rent replaced actual house prices in the CPI.
The change sure allowed for a huge amount of excess money creation over the past 20 years. We better hope that excess money stays out of the rest of CPI. Time will tell.
Good point. If actual housing prices were part of CPI, perhaps the Fed would have raised the Fed Funds earlier in 2004 and we might not have had as great of a housing bubble.
I actually had that debate with someone on another blog. He deserve a big "I told you so." His point was that the fed didn't care about asset prices - up or down. Maybe he missed the tech bust in the stock market.
The problem is that so many bank loans (bank assets) are founded on house values that the fed can't just ignore falling house prices. Leverage is a killer in reverse.
The asymetrical fed response leads to CPI inflation IMO. Artificially low interest rates cause huge economic distortions.
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