Inflation remains a hot topic, directly impacting everything from your grocery bill to interest rates. As of the latest data, two key inflation gauges — the Personal Consumption Expenditures (PCE) Price Index and the Consumer Price Index (CPI) — show that prices are still above the Federal Reserve's 2% target, with the core PCE at 2.8% and core CPI at 2.6%. Note: PCE data is through November 2025 and CPI data is through December 2025. The Fed's Preferred Inflation Gauge The Fed is on record as using PCE dat ...

Core Insights - Inflation significantly impacts household expenses, with the Consumer Price Index (CPI) being a crucial economic indicator [1] - The Bureau of Labor Statistics (BLS) categorizes expenditures into eight groups, with food, shelter, and clothing comprising over 60% of the CPI [2] CPI Component Analysis - Medical Care and Housing have seen the highest growth, each exceeding 100% since 2000, while Apparel has remained relatively unchanged [4] - Transportation exhibits high volatility, primarily driven by the Motor Fuel subcategory [5] - Energy costs are integrated into Housing and Transportation categories, with energy assigned a relative importance of 6.216 out of 100 in the CPI [7] Education Costs - College Tuition and Fees have increased nearly 200% since 2000, representing 1.324% of total expenditures, which can strain family budgets [8] - The BLS's calculation of tuition often does not reflect actual costs after financial aid, potentially exaggerating the inflation impact [9][10] Core Inflation Metrics - Core Inflation, excluding Food and Energy, is closely monitored, with a cumulative change of 85.5% since 2000 compared to 92.5% for headline CPI [12] Household Impact of Inflation - The effects of inflation vary significantly among households, with lower-income families and those with high transportation or medical costs being more vulnerable [15][16]

Core Insights - U.S. consumer prices increased by 2.7% in December year-over-year, aligning with forecasts, marking a year of gradually easing but uneven inflation across the economy [1] - The December Consumer Price Index (CPI) report indicates a 0.3% rise in consumer prices from November to December, driven primarily by shelter and food costs [2] Inflation Trends - Core inflation, which excludes food and energy prices, remained stable at 2.6% in December, consistent with the previous month [3] - Consumers expect near-term inflation to rise to 3.4%, reflecting concerns about financial conditions across different income groups [4] Federal Reserve Implications - The December CPI report will influence the Federal Reserve's interest rate decision at the end of January, with inflation still above the Fed's 2% target [5] - A decline in the unemployment rate from November to December has reduced expectations for another cut to the Fed's benchmark interest rate, with forecasts suggesting the rate will remain between 3.5% and 3.75% [6]

Core Viewpoint - The Reserve Bank of India (RBI) is expected to maintain the core components of the flexible inflation targeting (FIT) framework, as most economists believe that targeting headline inflation against core inflation with a 2-6 percent retail inflation target has been beneficial for the economy [1] Inflation Tolerance Band - The 2-6 percent inflation tolerance band, introduced in 2016, was already considered low, and it may be reassessed in the next 5-10 years as inflation forecasts improve [2] Policy Clarity - Economists recommend continuing with headline CPI inflation, emphasizing that food inflation, despite being supply-side driven, cannot be ignored due to its correlation with inflation expectations. A 4 percent inflation target is deemed optimal, and narrowing the 2-6 percent band could lead to unnecessarily restrictive monetary policy [3] - The headline target should be retained as it reflects the combined impact of food and core inflation on consumers, particularly for low and middle-income households, where food spending constitutes a significant portion of expenses [4] Continuation of Existing FIT - Continuing with the existing FIT is seen as a logical choice, as it has helped anchor inflation expectations, stabilize core inflation, and guide the policy rate trajectory towards its lower bound [5] Focus on Headline Inflation - The RBI should focus on the headline inflation number rather than sub-components, as controlling overall inflation is essential for central banks. The concept of core inflation should primarily serve to understand inflation dynamics [6] - The current FIT has effectively served India, with inflation generally conforming to the target band and reduced volatility historically. Inflation expectations have remained anchored to the 4 percent target, contributing to lower capital costs in the economy [6]

Today's CPI print lighter than expected though muddied a bit by the government shutdown. Goldman's chief economist Yan Hatsius is here at Post9 with what it means for the economy and of course for the Feds. It's nice to see you again.Welcome back. >> Great to see you Scott. >> Do you believe the 27 is real cuz there seems some some question because of the shutdown.>> There are some questions around the shelter numbers in particular and there is more uncertainty of course. So I would discount some of this. I ...

Economic Indicators - The recent CPI print was lighter than expected, influenced by the government shutdown, raising questions about its reliability [1] - Core CPI showed an average increase of eight basis points in October and November, but there are uncertainties, particularly regarding shelter numbers [2] - Core inflation appears to be stabilizing or slightly decreasing year-on-year, indicating improving underlying trends despite tariff impacts [3] Federal Reserve Policy - The inflation rate of 2.7% and unemployment rate of 4.6% are both significant, with the Fed's policy direction being influenced by these indicators [4] - Recent changes suggest that both inflation and unemployment trends may lead to additional interest rate cuts, with expectations of two more cuts in 2026 [5] - The Fed is currently not expected to cut rates in January, but the next employment report could influence this decision [6] Decision-Making Dynamics - The Fed's decision-making process is complicated by internal divisions, although leadership ultimately drives the final decisions [8] - If the Fed leadership decides that a rate cut is necessary, it could occur in January, despite the current cautious stance [9] - Concerns about cutting rates in a strengthening economy are mitigated by expectations of a soft labor market, with GDP growth projected at an optimistic 2.6% to 2.6% annually [10]

Core Insights - Inflation significantly impacts household expenses, with the Consumer Price Index (CPI) being a crucial economic indicator [1] - The CPI is divided into eight categories, with food, shelter, and clothing accounting for over 60% of the index [2] - Medical care and housing have seen the fastest price growth, each increasing over 100% since 2000, while apparel has only grown about 4% [4] CPI Component Analysis - Transportation exhibits high volatility, primarily driven by motor fuel prices, which affects overall transportation costs [5] - Energy costs are integrated into housing and transportation expenses rather than being a standalone category, with energy accounting for 6.216% of total expenditures [6][7] - College tuition and fees have increased nearly 200% since 2000, significantly impacting budgets for families with college-bound students [8] Core Inflation Metrics - Core inflation, which excludes food and energy, is closely monitored by economists and policymakers, with a cumulative change of 85.6% since 2000 [11][12] - As of September 2025, the annualized rate of change for headline CPI is 3.01%, while core CPI is at 3.02% [12] Household Impact of Inflation - The effects of inflation vary widely among households, with lower-income families and those with high transportation or medical costs being particularly vulnerable [15][16] - Inflation volatility disproportionately affects households with limited budgets, making discretionary spending challenging [16]

Core Insights - The Federal Reserve is expected to cut interest rates in the coming months due to a lack of surprising inflation data in September, which showed a 3% annual increase in the Consumer Price Index, slightly below expectations [2][5][8] - Core inflation, which excludes food and energy prices, also rose by 3%, down from 3.1% in August, indicating a stable inflation environment that supports the Fed's decision to lower rates [3][5][8] Economic Implications - A rate cut by the Federal Reserve will likely lead to lower interest rates for short-term loans and reduced yields for CDs and high-yield savings accounts, impacting consumer borrowing and saving behaviors [4][5] - Financial markets are anticipating a reduction in the fed funds rate to a range of 3.5% to 3.75% by the end of the year, reflecting a strong consensus on the Fed's direction [7]

The Bank of Canada continued to fade its preferred measures of underlying price pressures, saying it’s weighing a broader suite of gauges that suggest core inflation is closer to its 2% target https://t.co/rZYNS54cW3 ...

🇺🇸 UPDATE: US consumer spending rose 0.4% in August despite core inflation holding at 2.9%. https://t.co/32F3nQde0S ...