Figure 1 shows what has happened with US CPI, PCE and PPI inflation over the last 5 months (4 months for PCE inflation, in this case the data for December will be available only on Friday, January 26).
The X-axis shows the YoY rate, and the Y-axis the 3-month (annualized) rate.
The problem with higher inflation is in three places: (i) core services, (ii) food away form home, and (iii) energy services.
Energy services is part of Energy inflation and only makes up 3.27% of the total basket, but it shows where inflation is hotter (services). The last 3 monthly changes were as follows (Oct, Nov, Dec): +0.46%, +1.73% and +0.93%. This gives a 3-month annualized inflation rate of as much as 13.2%.
Figure 2 shows the same inflation series, but without the three Energy series (for better visibility). In the upper right corner, you can see the two hottest series: core services and food away form home.
Food away from home is only 4.87% of the entire inflation basket, while core services is as much as 59.06%.
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