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Inflation: Hot

How fast prices are rising across the economy. Inflation pressure is above its 20-year middle: hot.

Score 0.90 on a −2 to +2 scale: the average of 6 indicators, each placed by where today sits in its last 20 years. Indicators where a higher number means less inflation pressure are flipped.

Indicators

Connections

• Gas price, regularfeedsCPI, all itemsData agrees

  Energy is a direct, volatile part of CPI. Typical lag: same month. Strongest match in the same period (correlation 0.72, 368 observations since 1996).

• CPI, foodfeedsCPI, all itemsData agrees

  Food is a component of CPI. Typical lag: same month. Strongest match in the same period (correlation 0.69, 368 observations since 1996).

• Core PCE price indexdrivesFed funds rateData agrees

  The Fed targets 2% core PCE; persistent overshoots push rates higher. Typical lag: months. Strongest match 1 month later (correlation 0.44, 369 observations since 1996).

• Core CPIdrivesFed funds rateData agrees

  Sticky core inflation keeps the Fed from cutting. Typical lag: months. Strongest match in the same period (correlation 0.36, 368 observations since 1996).

• Average hourly earningscompared withCPI, all itemsData agrees

  Wage growth minus inflation = whether households are getting ahead. Typical lag: same month. Strongest match 12 months later (correlation 0.53, 222 observations since 2007).

• M2 money supplyleadsCPI, all itemsData agrees

  Fast money growth has sometimes come before inflation; the link is unstable. Typical lag: 12-24 months. Strongest match 18 months later (correlation 0.50, 350 observations since 1996).