Wednesday, July 16, 2008

Core Inflation


Interesting read from the editorial page of IBD. Year-over-year, the core rate remains tame.

If we're reading him right, Bernanke is now figuring that weak growth or
outright recession is a greater risk than inflation.

But that actually makes the Fed's case. If oil continues to retreat — and President Bush convinces the Democratic-led Congress to drill for more crude — our current inflationary spurt will be over.

As the chart shows, overall inflation has indeed risen above 4% — a scary level if allowed to persist. But inflation minus energy and food — core inflation — is a tame 2.3%. This is not a problem.

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