Inflation Rain Dance

Is this finally the CPI report that changes everything?

There was a meaningful beat on core inflation this morning that’s got everyone chattering like monkeys. The whole “Fed is behind the curve” thing is starting up too among the commentariat. Which is fine, maybe this is the big one.

Or maybe it’s one of the routine jolts higher in a measure that, overall, has been “disappointing” economists for years and years now – beats followed by misses followed by beats and then more misses.

Bloomberg:

Inflation may finally be getting back on track to reach the Federal Reserve’s goal, as the U.S. cost of living accelerated following a weak stretch of readings, Labor Department data showed Thursday.

The 0.2 percent rise in the core gauge ends a five-month streak of weaker-than-expected readings, and may soothe some concerns that inflation is slowing more broadly, though it will take more readings to determine whether the pickup can be sustained. The increase in the lodging category indicates the earlier decline in the sector was transitory.

Energy prices rose by the most since January and may reflect some impact from Hurricane Harvey. CPI data is collected throughout the month, and since the storm occurred in late August, the Bureau of Labor Statistics expects most of the data to come from before the storm, BLS economist Steve Reed said Wednesday. Data collection was disrupted in two of the 87 U.S. urban areas where prices are gathered.

Too soon to know. Definitely too soon to be turning our portfolios on their heads and flipping around positions.

The markets are absolutely moving on this today. So are the mouths.