The Bureau of Economic Analysis (BEA) reported 2 days before Christmas that the PCE price index had decreased 0.1% m/m in November for the first time since 2020, and excluding food and energy, had increased only 0.1%. On a year-over-year basis, these indices rose 2.6% and 3.2% respectively. What is particularly remarkable, however, is that over the past 6 months, inflation is where the Fed wants it – 2%. Indeed, core PCE inflation – the preferred inflation measure of the Fed – is plummeting, running at an annualised rate of 1.9% and 1.2% over the past 6 and 3 months respectively. Using a more conservative annualised 3-month moving average, the core PCE deflator has grown 2.2%. This, however, is bound to go lower still, because daily real-time indicators from over 30 data sources, encompassing more than 13 million data points, are dropping like flies. The USA Daily Truflation is up 2.56% from a year ago and falling from 6.5%.
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By Hubert Marleau
