Core services inflation dished up bad head fakes last time we had this mess in 1966-1982. Mention of a rate hike crops up in a Fed speech.
Four decades of history say it’s not over until the 2-year yield overshoots the EFFR. It has undershot for a year, and inflation is taking off again.
Reheating services inflation isn’t a surprise. But the PPI for finished core goods saps hopes for goods “deflation” to hold down overall inflation.
But that’s how inflation is, once out of the bottle: It serves up nasty surprises.
But the plunge in retail prices of used cars and trucks hasn’t progressed nearly as much.
It’s not just the top 10% or whatever who got the wage increases.
And a look back at the head-fakes core services inflation dished up last time with this type of inflation.
Bank of Canada’s two preferred measures of underlying inflation accelerated, tripping up widespread expectations of cooling.
The action is in services. But now new & used vehicle prices are rising again. And energy. Food edges to new painful high.
But overall and “core” PCE price indexes decelerated, on plunging gasoline prices, a dip in food prices, and a big drop in durable goods.