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Journal Article
Comparing Measures of Housing Inflation
Measuring the price of shelter for homeowners is difficult, even when housing markets are stable. A new measure of shelter price inflation uses mortgage, tax, and insurance payments, rather than the implied rental value of homes used in the consumer price index (CPI). The payments method suggests year-over-year shelter price inflation rose 4.3% nationally in July, compared with the CPI’s 5.8% estimate. Conditions in rental markets likely explain this difference. Comparing the varying results nationally and across regions highlights the challenge of accurately measuring the shelter inflation ...
Newsletter
The Rise (and Fall) of Inflation During the Early 2020s
Inflation has been on many people’s minds. There are several measures of inflation available, and each one plays a role in providing a more complete understanding of inflation’s causes and effects. This Page One Economics® Econ Primer describes key measures of inflation, including the consumer price index, and how the Federal Open Market Committee pays particular attention to these measures as it makes policy decisions—adjusting its policy stance when necessary to move the economy toward maximum employment and price stability.
Using Core Inflation to Predict Headline Inflation
An analysis of CPI data suggests that a measure of inflation excluding food and energy and a measure excluding only energy are useful predictors of overall inflation 12 months in the future.
Journal Article
Inflation, Part 2: How Do We Construct and Choose an Index?
Both the CPI and the PCE price indexes measure the prices of consumer goods and services— but they differ in important ways.
Newsletter
The Inflation Rate Is Falling, but Prices Are Not
Inflation is likely a topic your students are familiar with, but there is still a lot of confusion around the concept. This brief article explains the seeming paradox we see in our economy: The inflation rate is decreasing, but prices continue to increase. We’ll also disentangle the concepts of inflation, disinflation, deflation, and the CPI.
Measuring Inflation: Headline, Core and “Supercore” Services
Inflation measures like CPI and PCEPI and their variations of headline, core and supercore differ in the prices they cover and in the weighting of price categories.
What Do Components of Key Inflation Measures Say about Future Inflation?
A new analysis suggests that the food expenditures category of the consumer price index could be a useful signal of future headline inflation.
Not all price increases are equal; pandemic-era outliers drove inflation spike
Many individual price changes make up widely used gauges of inflation. Their relative importance changes over time and may affect how consumers perceive inflation. Such perceptions can prompt households to update their inflation expectations, decreasing optimism about real economic activity.
Newsletter
Adjusting for Inflation
As inflation raises the overall price level in an economy, the purchasing power of the dollar decreases and both borrowing and lending costs increase. The January 2023 issue of Page One Economics discusses how price indexes can be used to transform nominal wages and interest rates into real, or inflation-adjusted, values.
Beyond the Mean: Exploring Tail Risks in Inflation Expectations
An analysis of inflation expectations suggests that financial market participants see a 50% probability that CPI inflation could be higher than 2.5% over the next five years.