The year to year increase in inflation, as measured by the Finished Consumer Goods PPI ex food and energy slipped to +2.67% in August. That’s down from +2.92% in July, but obviously it’s above the Fed’s 2% target. It has been above that target since January of 2014 and for 54 of the past 60 months.
I like this measure because, unlike the CPI, it is not skewed lower by under measuring the cost of housing and then overweighting the under measured number in the total index. The BLS uses a cheap trick called owners equivalent rent to reduce the actual inflation rate for housing, then it imputes the phony number as 41% of Core CPI. You can read the dirty details of how its done here.
If you are like most people, the unmassaged Core Consumer Goods PPI measure of inflation is probably much closer to the experience you have had with rising prices for the past several years. With the exception of 5 months in 2013, it has been above the Fed’s 2% target since 2010. It fluctuates, but it has been above 2% more than 90% of the time for