Friday, March 6, 2015

Most recent updates to core CPI and core PCE inflation

FRED has been updated with the latest PCE and CPI price level measurements from January. No big surprises, but here are the latest smoothed model results (the boxes show the zoomed-in region):

I'd like to re-iterate a comment I made in the last post: the information transfer model doesn't explain everything on its own, There are some obvious and genuine effects of the oil price spikes in 1973 and 1979 that the model doesn't capture. That is what happens when a particular market (in this case, oil) becomes important and you can't just assume thousands of random markets.

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