Table 2 Changes in Price Levels (March 2023)
12-Month % Change
1-Month % Change
Consumer Price Index (1982 - 84 = 100)
5.0 5.6 4.2 2.7
0.1 0.4 0.1
Core Consumer Price Index
Personal Consumption Expenditures Price Index
Producer Price Index (PPI)
-0.5
Description: • Consumer Price Index (CPI): Measures the average monthly change in the price of a representative basket of goods and services bought by consumers. • Core CPI (CPI less food & energy): Measures the average monthly change in prices for a typical basket of goods, excluding food and energy. • Personal Consumption Price Index (PCE): Captures monthly changes in price levels over a wider range of consumer expenditures that account for changes in consumer behavior. • Producer Price Index (PPI): Measures the average change in selling prices received by domestic producers for their output. Output includes intermediate goods along with final goods and services. Analysis: • The 5.0% reading for the March CPI shows that inflation continues to decline after peaking in June last summer at 9.2% • The Core CPI which excludes food and energy items from the basket of goods is an important indicator of inflation because food and energy prices tend to be highly volatile. By eliminating these items, it often is easier to detect trends in overall price changes. 5.6% for the Core CPI indicates that much of the reduction in overall inflation was in energy commodities. Increases in indexes for shelter, airline fares and new vehicles accounted for the slow rate of disinflation. • Unlike the CPI, which is based on a fixed basket of goods, the PCE price index accounts for changes in consumer behavior in response to price changes and other factors. The 4.2% year over year increase of the PCE price index in March is down from the 5.1% increase in February. • By tracking changes in prices that manufacturers and wholesalers pay for goods during different stages of production, the PPI can be a leading indicator of future consumer prices. The good news here is that the March PPI declined by 0.5% since February and the PPI only increased 2.7% over the year. This is good news and suggests that inflation for consumers may be easing in the near future.
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Center for Business and Economic Insight
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