This morning’s CPI release from the BLS showed a slight uptick in inflation from 1.7% to 2% year over year. The core inflation rate has now completely converged with the headline rate in what is a clear confirmation that the headline rate was temporarily elevated in 2010 and 2011.
The housing adjusted CPI rate which is now published by Orcam Financial Group, was marginally higher on the month at 1.85% from last month’s reading of 1.55%. This is consistent with an economy that is operating well below capacity and an inflation rate that remains well below its historical averages. These independent inflation gauges have all been confirming the BLS data in recent months despite some chatter that inflation is running higher than some might presume. We believe this is due to the rise in prices in what some might deem “items you can’t live without”. As we highlighted earlier this month, there has been some deviation in the price of particular items (like energy, health care, rent, etc) and some of the less “necessary” items included in the CPI.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.