Inflation Subdued, Industrial Production and Capacity Utilization Edge Upward
The latest estimate of the CPI was released today. Via the Atlanta Fed's Inflation Project:
Though most CPI indexes rose slightly in November, core measure remains near historical low, Atlanta Fed: The Bureau of Labor Statistics reported that the all-items consumer price index (CPI) rose an annualized 1.5 percent in November. The indexes for energy, food, and core prices all increased slightly. The core CPI edged up 0.1 percent in November after no change in the past several months. In fact, the core CPI is up only 0.7 percent from a year earlier, nearly its slowest year-to-year advance in more than 50 years.And, from the Cleveland Fed:
Cleveland Fed Estimates of Inflation Expectations: The Federal Reserve Bank of Cleveland reports that its latest estimate of 10-year expected inflation is 1.64 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade. ... Estimates are updated once a month, on the release date of the CPI.
Latest Estimates
Thus, both inflation and expected inflation remain below the Fed's long-run target values, something that will increase the Fed's confidence that it can keep inflation under control as it pursues QEII.
Capacity utilization and industrial production also edged up:
Industrial production increased 0.4 percent in November ... The capacity utilization rate for total industry rose to 75.2 percent...Here's are graphs of both series:
The upward movement in both series is good news, but there are two things to note. First, while both series have been rebounding, the rate of increase appears to have slowed in recent months. Second, there is still a considerable gap to close, and the slowing of the rate of increase is bad news for the speed of the return to full employment.
