Table 2 Changes in Price Levels (September 2022)
12-Month % Change
1-Month % Change
Consumer Price Index (1982 - 84 = 100) Consumer Price Index (1982 - 84 = 100) Personal Consumption Expenditures Price Index
8.2 6.6 6.2 8.5
0.4 0.6 0.3 0.4
Producer Price Index (PPI)
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: • After peaking in June, inflation as measured by the CPI began a slow descent in July. In September, inflation increased by 8.2% on an annual basis. More recently, the CPI increased by 7.7% in October, raising hopes for a continual decline in upcoming months. • 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. The core CPI peaked in September, increasing by 6.6% from one year ago, the highest since August 1982. The good news is that the rate of increase for October fell to 6.3%. • CPI data gauges the change in prices of a fixed basket of goods over time. As such, it fails to incorporate changes in consumer buying patterns in response to changing prices and other factors. The PCE price index does account for changes in consumer behavior. In September, the PCE price index increased by 6.2% compared to a year ago. Like the CPI, the PCE index peaked in June at 6.9% but has declined since then. • 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. After peaking in March at 11.7%, the percent increase in the PPI from a year ago has been consistently declining each month. The October report show that the PPI rose by 8.0%, down from 8.4% in September. This maybe a sign that firms are facing diminishing cost pressures and therefore could indicate declining consumer price increases in upcoming months.
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Center for Business and Economic Insight
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