Inflation Is…Still Pretty Low

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Ylan Mui reports on the latest CPI inflation numbers:

Excluding the volatile food and energy sectors, prices rose a more modest 0.2 percent in April, a measurement economists often refer to as core inflation. Compared to a year ago, that figure has risen 2.1 percent….The solid data helps bolster the case for the Federal Reserve to raise interest rates at its next meeting in June.

Mui might well be right that this is how the Fed will choose to respond. But there are a couple of things that make this supposedly scary 2.1 percent number a little less impressive:

  • The core inflation rate did indeed go above the magical 2 percent barrier in December, but it’s gone back down for two months in a row since then and is now only barely above 2 percent. It doesn’t really look like core CPI is on fire.
  • The Fed doesn’t even use core CPI anyway. It uses core PCE as its preferred measure of inflation, and core PCE has been well below 2 percent during the past couple of years. What’s more, the markets all seem pretty convinced that inflation will stay below 2 percent. The forward-looking inflation rate has done nothing but tumble since 2013, and it’s at 1.7 percent right now.

The Fed might be looking for excuses to raise interest rates, but inflation just isn’t it. It remains subdued and well anchored. They’ll need some other pretense if they insist on tightening policy rates a bit.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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