Have We Passed the Cyclical Bottom?

The CPI report for October was just released this morning. The core rate (which is the important rate to check if you want to understand the underlying trend in inflation) of consumer price inflation was up .2% last month. That means that the 12-month core CPI inflation rate edged up from 1.25% to 1.30%. With the exception of last May, that’s the first time we’ve seen the 12-month inflation rate rise in nearly 1 ½ years. (See this earlier post for a chart and a bit of context.) Is it time to say that we’ve passed the bottom of the cycle? The PPI report from last week also showed a slight uptick in core prices last month… So put that together with all of the good news on output lately, and one could start making the case that we’ve reached the bottom of the business cycle — at least for now.