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  • For 7 Months, “Core” CPI Hasn’t Improved at All, Stuck at 2.5x Fed Target. Services CPI Accelerates, Rents Not Playing Along, Used Vehicle CPI Spikes. But Energy Plunged.

For 7 Months, “Core” CPI Hasn’t Improved at All, Stuck at 2.5x Fed Target. Services CPI Accelerates, Rents Not Playing Along, Used Vehicle CPI Spikes. But Energy Plunged.

June 14, 2023

by Wolf Richter Wolf Street

Powell has been talking about this. Energy cannot plunge forever.

The “Core” CPI has shown no change in direction for seven months, running at an annualized increase of just above 5%: two-and-a-half times the Fed’s 2% target, and it has gotten stuck there. That’s a problem Powell has been talking about for months, and it’s just not changing. This is “sticky inflation.”

On a month-to-month basis, core CPI, which excludes the volatile food and energy products, rose by 0.44% in May from April, the second month in a row of acceleration, according to data by the Bureau of Labor Statistics today. It has been in the same range for the past seven months, which makes for an annualized rate of just over 5% (red line in the chart below).