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Four Inflation Measures, One Chart, All Deflationary

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Regardless of which is your preferred measure of inflation - the traditional Core Consumer Price Index, the Cleveland Fed Trimmed CPI, etc. - the picture is the same.

Bloomberg economist Joseph Brusuelas this morning presented a chart showing four measures of inflation on a year-over-year percentage change basis:

Core CPI
Core PCE
Cleveland Fed Trimmed CPI
Dallas Fed Trimmed PCE

As you can see, all four show the same picture, deflationary pressures increasing in intensity.

Brusuelas notes that, "the rise in the cost of shelter over the past three months will likely prove transitory. The supply of housing is too large and 4-5 million of foreclosures that will hit the market will probably place downward pressure on the median price of a home." Because shelter comprises 42 percent of CPI index, falling prices for homes translates to lower core estimates of inflation.
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