Inflation Has Been Running Even Hotter Than Thought
The persistence of professional economists underestimating inflation in the Biden era will someday make a great topic for economic historians to study.
The Bureau of Economic Analysis on Friday released the March estimate for the personal consumption expenditure (PCE) price index. Both the headline and core indexes were up by 0.3 percent for the month, or an annualized rate of 3.9 percent. The twelve-month increase came in at 2.7 percent for headline inflation and 2.8 percent for core.
After yesterday’s gross domestic product report showed quarterly inflation rose by more than expected, a big question was whether this was due to a spike in March or upward revisions to prior months. Because a good deal of the monthly PCE inflation figure can be forecast based on equivalent measures in the consumer and producer price indexes released weeks earlier, the best interpretation was that the upside surprise was likely to be rooted in revisions.
That turned out to be right. January’s headline PCE estimate was revised up from 0.377 percent to 0.423 percent, a significant five basis point upward movement that is concealed by the fact…
