New CPI Data

The danger of deflation seems to be receding. The BLS’s newest CPI data (for February) indicates an increase in the core rate (excluding food and energy) of 0.2%, similar to last month’s increase. The 12 month change in the chained core CPI is 0.8%, up slightly from last month, and the 12 month change in the regular core CPI is 1.25%, also up slightly from last month. I think we can start to feel confident that inflation has stopped falling and has leveled off. Now we just need to see a bit of an increase in inflation to provide a sign of some pricing power, and we’ll have evidence that the economy is really strengthening.