“Idiosyncratic and Transitory Factors” Holding Down Inflation: New Definition of Transitory


The latest Personal Incomes and Outlays report showed that the Personal Consumption Expenditures (PCE) price index was only up 1.4% from the same quarter a year ago. Excluding food and energy, the PCE was up 1.5%.

Yesterday, I made this sure-fire prediction: “Consumers like falling prices but the Fed sure doesn’t. Expect to hear more ‘transitory‘ comments from Janet Yellen.” For details, please see Personal Income Flat in June, May Revised Lower: PCE Inflation Down Again.

Yellen did not chime in today, but Loretta Mester, president of the Cleveland Fed did.

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