What if?
The core rate of inflation, which
excludes volatile food and energy prices, held steady at an increase of 0.2%.
The number referred to as the headline number fell 0.6% due to an overall
decline in energy prices in November. Indeed that is the number still most
commonly reported in the headlines. A quick glance over the headlines this
morning shows that most are reporting inflation as being sharply lower. And with
gasoline prices well below the post hurricane spike they actually do feel lower.
But I want to posit a “what if?” for you. What if energy
prices hadn’t fallen off so drastically (8% for overall energy and 15% for
petroleum based energy)? Where then would the core rate be? What if the core
rate is being rounded down from data that taken to the hundredths would be a
more specific rate of say 0.24%, then just a hundredth of a percent change
higher would have caused the core rate to be rounded up to 0.3%, a number that
could cause problems for stocks.
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