inflation

Today’s September CPI came out with year over year inflation at 5.4%. While it may seem like core CPI was good news, we continue to see temporary aka transitory inflation becoming more and more persistent aka permanent.

This is the graph I have been posting where I remove oil and used cars from the CPI and get what I’m calling ‘core’ CPI.

You can see that CPI is peaking here just over 5%, but you can also see that the ‘core’ part of CPI is more approaching 3%.

As I stated in the Econ forecast, supply chain issues are going to take a loooooong time to fix. Unless the economy completely craters, inflation is here to stay.

The headline inflation numbers were better than expected and year-over-year inflation is slowing. But CPI outside transportation is still rising.

Most of the growth in inflation from January to June was just used car prices and oil. Used car prices are due to a supply issue, not a money printing issue. Oil is just reinflating.

But now, transportation is starting to cool and therefore CPI outside of that is starting to slowing rise. At 2.2% year-over-year, it’s not a big issue, but something to slowly watch.

Regardless, I don’t expect this will alter the Fed’s plan to start to Taper later this year.