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Here’s how bad today’s official report on the Federal Reserve’s preferred gauge for U.S. inflation was: It looked awful even without taking the baseline effect into account. That is, it looked awful even if you don’t examine how the new (August) year-on-year increases compare with both their predecessors and those for the preceding year, and understand that the 2021-22 numbers are coming off 2020-21 results that were alarmingly high to begin with,

Yes, the annual increase in August in the headline version of the Fed’s favored price index for Personal Consumption Expenditures (PCE) dipped from 6.4 percent in July to 6.2 percent. But by last August, it had already climbed to 4.2 percent – more than twice the Fed’s target rate.

Worse, though, was the acceleration in the August annual core PCE read from 4.7 percent to 4.9 percent . These are the figures that leave out food and energy prices – supposedly because they’re volatile for reasons that have nothing to do with the economy’s underlying inflation prone-ness.

Inflation optimists had seized upon the June-July drops in the headline PCE (from seven percent to 6.4 percent and from five to 4.7 percent, respectively) as a major sign that price increases had peaked. The August statistics seem to throw frigid water on that conclusion.

Worse still was the speed up in both inflation indicators on a monthly basis. Headline PCE had actually fallen sequentially in July by 0.1 percent, but in August it rose by 0.3 percent. And that’s despite energy prices nosediving (by fully 5.5 percent on month) both because towering gasoline prices had forced many Americans to cut back on driving, and because the rest of the world economy is seeing dramatically reduced growth, which depresses energy demand.

Replacing energy as a major cost-of-living driver were food prices, which were up month-to-month by 0.8 percent. So unless you think energy prices will keep sinking like a stone, it’s become tougher to stick with the peak inflation claims.

But the biggest blow to the peak inflation case came from the monthly core results. Even omitting those volatile food and energy prices, core inflation jumped by 0.6 percent between July and August, after flatlining between June and July. And this new August monthly hike ties June’s for the year’s worst.

And I’d be remiss in closing without mentioning two recent Biden administration steps sure to buoy inflation still further – the student loan forgiveness plan (even – if it survives legal challenges – in its new scaled back form) and his big expansion of food stamp benefits (prompted at least in part, and ironically, due to those huge food price increases). Whatever you think of the merits of these programs, their net effect inevitably will put more income in consumers’ pockets and thus support spending while doing nothing to increase production. That is, as economists like to say, more money will be chasing the same amount of goods and services – an inflation-fueling formula no thinking person disputes.

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