Core inflation creeping up

I didn’t post on this earlier. Then came across this great article that said what I had in mind.

Core Inflation Rises – Interest Rates May Follow, by James C. Cooper. Couple of good graphs in the article along with the great discussion.

In May 2011, the core inflation rate was 0.3% while the posted CPI was 0.2%. Previously the core rate was low, in the range of 0.1% or 0.2% per month. The pundits have been saying not to worry about the official CPI rate because it includes volatile food and energy prices. One wag pointed out that is fine as long as you don’t eat and don’t drive your car (I’ve seen that line before – Mr Cooper mentions it also).

Now the core inflation rate is creeping up and actually was higher than the official All-Urban CPI. We will need to keep an eye on future months. I’m wondering if those fuel costs are visibly working their way into other things we buy.

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