Skip to main content

The Fed’s Preferred Inflation Measure Reaches Fastest Pace Since 1983

PCE, the Fed's preferred measure of inflation is rising at the fastest pace in nearly 40 years.
  • Author:
  • Publish date:
Four Measures of Inflation, data from St. Louis Fed, chart by Mish

Four Measures of Inflation, data from St. Louis Fed, chart by Mish

The Bureau of Economic Analysis (BEA) released Personal Income and Outlays data for January of 2022 today. 

The spotlight on this post is Personal Consumption Expenditures (PCE) price data.

PCE differs from the CPI (Consumer Price Index) in that it includes expenses paid on behalf of consumers such as Medicare and company medical plans whereas the CPI only included expenses directly paid by consumers.

Neither index directly includes housing prices.

The "core" measures exclude food and energy.

PCE Details for January 2022    

  • The PCE price index for January increased 6.1 percent from one year ago
  • Energy prices increased 25.9 percent
  • Food prices increased 6.7 percent. 
  • Excluding food and energy, the PCE price index for January increased 5.2 percent from one year ago.
  • PCE rose 0.6 percent from December.
  • Core PCE rose 0.5 percent from December.

Chart Since 1971 

Four Measures of Inflation, data from St. Louis Fed, chart by Mish

Four Measures of Inflation, data from St. Louis Fed, chart by Mish

This was yet another hot report, and things are actually worse than the BEA and BLS present because home prices are neither in the CPI nor the PCE. 

Housing Prices

Case-Shiller home price index data via St. Louis Fed, chart by Mish.

Case-Shiller home price index data via St. Louis Fed, chart by Mish.

CPI vs Case-Shiller Adjusted CPI

Scroll to Continue

RECOMMENDED ARTICLES

Case-Shiller home price index data via St. Louis Fed, chart by Mish.

Case-Shiller home price index data via St. Louis Fed, chart by Mish.

Case-Shiller home price data is as of December. At that time the CPI was up 7.04% for the year, it's now up 7.5% for the year as of January.

Factoring in home prices the CPI is up 9.88% in the last 12 months. 

For discussion, please see Home-Price Growth Accelerates, 2021 Annual Surge Is the Most on Record

CPI Up Most in 40 Years

For more on the CPI, please see CPI Jumps Most Since February 1982, Up at Least 0.5% 9 Out of Eleven Months

Alleged "Benefits of Running the Economy Hot"

Meanwhile, Charles Evans, president and chief executive officer of the Chicago Fed wants to run the economy hot.

For discussion, please see Chicago Fed President Praises the "Benefits of Running the Economy Hot"

This post originated on MishTalk.Com.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish