Independent Inflation Gauges Begin to Move Higher
Recent readings on some widely followed independent inflation gauges show low historical levels of inflation, but a clear change from the recent disinflationary trend. Let’s review a few of the gauges.
According to the ECRI their US inflation gauge moved to a year over year reading of 3.5% in September:
U.S. inflationary pressures were higher in September, as the U.S. future inflation gauge climbed to 103.4 from an upwardly revised 101.0 in August, originally reported as 100.6, according to data released Friday morning by the Economic Cycle Research Institute.
“The USFIG jumped in September to an 18-month high,” ECRI Chief Operations Officer Lakshman Achuthan said in a release. “Thus, U.S. inflation pressures have moved up a notch.”
The latest Billion Prices Index showed a slight uptick to just under 2:
My Housing Adjusted CPI is telling a similar story at 1.6%:
The official BLS report showed inflation at just 1.7% last month, but it’s important to bear in mind that inflation has averaged about 3.5% per year since the BLS began tracking this data. The independent gauges all confirm the BLS data and even though the trend appears to have changed it’s safe to say that inflation remains historically low.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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12 Comments
Cullen, assuming you subscribe to ECRI, how good is their future inflation gauge? They talked about it in a recent (pay-walled) report … http://www.businesscycle.com/ecri-reports-indexes/report-summary-details/economic-cycle-research-cyclical-forces-on-inflation-and-deflation
Should we be giving it serious weight?
It doesn’t give as accurate YoY readings as BPP. But it’s one of the few independent gauges out there so our options are fairly limited….
Just checked …
PCE was 5.3% in August (1 month; annualized)
core was 1.3%
Could ECRI just be picking up the same 1 month blip in food & energy; what additional info are they giving us?
CPI-U share of medical is about 7%. GDP share of medical is about 7%.
hmmm…
Make that ” GDP share of medical is about 17%.”
Looks like Cullen makes the top 5 bloggers from the reformed broker point of view.
http://www.thereformedbroker.com/2012/10/09/who-are-the-five-best-financial-bloggers/
Thanks Cullen for your work and congrats on gerting increased recognition
Josh is too kind….
You mean that all of the prices going up around me are really happening?
What prices? If the CPI is food and gas ex-everything else in the world then this is a valid criticism….
Food, gas, utility bills, health care premiums, education, rent, etc.
Price inflation is a constant of the modern economy.
Here’s that index. At less than 2.5% it’s not exactly as frightening as some imply….
Cullen do you “believe” in treasury minus tips yields to get a view of implied inflation? It is also showing an uptick?