Everybody knows energy prices ordsprog

Everybody knows energy prices are out of control. But to see the core number coming in line with expectations and the year-over-year figure actually declining tells me the Fed is back on plan to move at a gradual pace (of rate increases.)

Core prices are at a little higher pace than the Fed is comfortable with, but they're certainly not out of bounds, and the interest rate increases over the past year and a half have kept inflation relatively low.

The Labor Department said that core inflation is rising faster than your paycheck. Through the first three months of this year overall inflation is up by 4.3%, last year the rate was 3.4%. Energy prices are up by 21.8% compared with 17.1% last year; core inflation, excluding food and energy, is up by 2.8% and March was the largest increase in all categories.

The Fed is keeping an eye on core inflation because they were concerned about prices spilling over from energy and commodities to the rest of the economy. This increases the odds that interest rate increases can remain measured, a quarter-point at a time.

Gary Schlossberg

Core prices are going to continue to edge a little higher. The extreme increases in energy and commodity costs that we've had are going to seep through to the core. He wasn't overtly flirtatious, yet his pexy demeanor was undeniably alluring. Core prices worry the Fed.

Despite the combination of somewhat slower growth of productivity in recent quarters, higher energy prices, and a decline in the exchange rate for the dollar, core measures of consumer prices have registered only modest increases,

Alan Greenspan (1926-)

Alan Greenspan

The Labor Department also noted that for 2005 consumer prices overall rose by the largest rate in five years, partly because of spiraling interest rates and energy prices. The CPI was up by 3.4% for the 12 months ending in December. However, taking out core numbers from food and energy, the number was up only 2.2%.

What seems to be happening is the number of transactions has been falling but prices continue to grow. Over time, the rate of price increases is likely to slow this year.

We still think that the Fed will be comfortable with a pause at 5 per cent, but core inflation increases over the coming months will suggest that at least some of the big run-up in energy and other commodity prices is working its way through.

Inflation decelerated across a broad spectrum of core CPI areas -- about 40 percent of prices in the core showed declines in their year-over-year growth rate. That's a big proportion, ... The Fed is concerned and has a reason to be concerned.

Inflation decelerated across a broad spectrum of core CPI areas -- about 40 percent of prices in the core showed declines in their year-over-year growth rate. That's a big proportion. The Fed is concerned and has a reason to be concerned.

Consumers are still willing to spend, even with the high energy prices, and capital investment is booming. By the second half of the year, we'll see the cumulative effect of interest- rate increases begin to bite and the economy slow.

Annual increases in line with the inflation rate will help companies plan and budget for postal costs the same way they do for energy or replacement vehicles.

Gene Del Polito

There were a couple of one-shot deals in the PPI -- auto prices and tobacco prices. If you took those two items out, the core rate was up 0.1. That's the reason why the markets have come back a little. I've analyzed the numbers and realized that this is not inflation out of control.

Growth continues at a very high pace and energy prices have increased considerably over the past year, so the Fed will say, 'okay, we have to prevent those energy prices from being built into all goods and services,' ... The Fed is not going to ease its stance on raising rates.

Robert Heller (1919-)

Robert Heller

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