OPINION: The Federal Reserve has actually hit its 2% target over the past three months, columnist Rex Nutting writes as he examines what he thinks is the best indicator of inflation now and in the near future.
That’s the big question facing policy makers, investors and consumers.
“ The Fed has actually hit its 2% target over the past three months, but of course the Fed is concerned that inflation could accelerate from here, especially in the hugely important shelter category, where hot inflation for the next year or so is baked into the cake. ” The year-on-year perspective is good for seeing how far we’ve come, but it’s not so good at predicting where inflation is going, because it’s essentially a backward-looking measure. It gives equal weight to inflation in September 2021 and inflation in September 2022. Yet the inflation rate from a year ago has little bearing on what the inflation rate will be going forward.
In this case, the data would say that the CPI rose 0.4% in September after a 0.1% increase in August. This perspective answers the question: What’s happening with inflation yesterday, today and tomorrow?
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