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The Fed's Preferred Measure of Inflation Jumps to 6.6%, a 40-Year High

Following the first quarter 2022 GDP release, BEA released Personal Consumption Expenditures (PCE) inflation data for March.
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PCE data from BEA, CPI data from BLS, chart by Mish

PCE data from BEA, CPI data from BLS, chart by Mish

PCE Details 

  • The PCE price index for March increased 6.6 percent from one year ago, reflecting increases in both goods and services. 
  • Energy prices increased 33.9 percent
  • Food prices increased 9.2 percent. 
  • Excluding food and energy, the PCE price index for March increased 5.2 percent from one year ago.

PCE differs from the CPI in that the former includes expenses paid on behalf of consumers such as employer health care plans. 

CPI Year-Over-Year Breakdown

CPI data from the BLS, chart by Mish

CPI data from the BLS, chart by Mish

Neither the PCE nor the CPI directly includes home prices. Instead the indexes include rent, and Owners' Equivalent Rent (OER).

OER is the mythical price one would pay to rent one's own home from oneself, unfurnished and without utilities.

Case-Shiller Home Prices

Case-Shiller home prices via St. Louis Fed, chart by Mish

Case-Shiller home prices via St. Louis Fed, chart by Mish

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If the BLS were to directly factor in home prices instead of OER, the result would be an adjusted annual CPI rise of 10.74%. 

That's a new record high for Case-Shiller data series.

For discussion please see Housing-Adjusted CPI Inflation Hits New Record High Dating to 1987

For discussion of the latest GDP numbers, please see GDP Declines 1.4% in First Quarter of 2022 Sounding Recession Bells

This post originated on MishTalk.Com.

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