It's the newest buzz word on Wall Street, so what exactly is supercore inflation?

[progree]

4. CPI vs. Core CPI and why the Feds use the core measure to forecast FUTURE inflation

I know that the Fed has historically targeted core PCE not core CPI, but it will take some spreadsheet work to get 12 months of PCE and core PCE numbers and more time to construct the graphs. But graphs of the last 5 months of both the PCE and the Core PCE is at: https://www.democraticunderground.com/10143025190#post11

Now back to the CPI:

Last 6 months ANNUALIZED:
CPI: +1.9%
CORE CPI: +4.6% < == Last 3 months: 3.2% annualized

CPI - https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
CORE CPI - http://data.bls.gov/timeseries/CUSR0000SA0L1E&output_view=pct_1mth



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As for why the Fed prefers core inflation (i.e. without food and energy) over full measure inflation, I cover that in #10
https://www.democraticunderground.com/10143025190#post10

Basically, the energy and food are quite volatile from month to month, especially energy. That makes the full measure CPI jump around. The Fed doesn't want to go crazy raising interest rates in months when energy jumps, and dropping interest rates like crazy when energy prices drop bigtime. Rinse and repeat.

I've seen a multi-decade graph with both core CPI and full measure CPI together on the same graph. Basically, the core CPI looks like a smoothed out version of the full measure CPI, while the latter oscillates around the core CPI.

While my chart above is not multi-decade, but rather just one year, it is clear that full measure CPI is quite more volatile than core CPI.

Note also, incidentally, that during the first 6 months of 2022, the full measure CPI averaged much more than the core CPI. In the last 6 months of the year, the opposite was true.

As for what people have experienced and are experiencing, and whether wages are keeping up, the full measure CPI is the only relevant measure. Its for projecting out inflation in the future that the core is preferred.

As for shelter aka housing -- that's rent and owner's equivalent of rent. That one is sticky, e.g. currently those measures are still going up, because leases signed several months ago when they were going up are still in effect. But new leases have been going down. The housing stuff is covered in the old inflation Megapost at: https://www.democraticunderground.com/10143007428#post2