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Inflation and Prices

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Whether the July price statistics show inflation to be high or low is a matter of perspective. Judged against this year’s performance, the July numbers appear modest. The Consumer Price Index (CPI) rose an annualized 2.8% for the month, or about 3/4 percentage point under its 12-month average increase. However, the July data also indicate that retail prices continued to rise at the somewhat elevated pace set in 1999—about one percentage point above their 1997–99 average growth rate. Also, signals from July’s so-called “core” inflation statistics (statistics that attempt to distinguish between transitory and permanent movements in the data) were a bit high. The CPI excluding food and energy items rose 2.7% in the month, or roughly 1/4 percentage point higher than its 12-month average, while the median CPI jumped 3.5%, more than 3/4 percentage point higher than its 12-month average. Finally, the PCE Chain-Type Price Index, an alternative measure of retail prices, has risen slightly more than 2 1/2% in the past 12 months, nearly the highest growth trend posted in more than five years.

Suggested citation: "Inflation and Prices," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-09, pp. 07-08, 09.01.2000.

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