Table 2 Changes in Price Levels (September 2023)
12-Month % Change
1-Month % Change
Consumer Price Index (1982 - 84 = 100)
3.7 4.1 3.4 2.2
0.2 0.2 0.4 0.5
Core Consumer Price Index
Personal Consumption Expenditures Price Index
Producer Price Index (PPI)
Description: • Consumer Price Index: 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 Expenditures 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 12-month reading of 3.7% for the September 2023 CPI shows a continued decline in inflation following the 9.2% peak in June of 2022. The latest October number of 3.2% shows further progress on the inflation front. • The Core CPI excludes food and energy items which can be highly volatile and often mask underlying inflationary trends. The Core CPI of 4.1% over the last year similarly reflects declines in inflationary pressures. As recent as March 2023, core CPI stood at 5.6%. • Unlike the CPI which is based on a fixed basket of goods and services, the PCE index relies on a basket that changes over time, reflecting changes in consumption patterns. It is also the indicator that has the greatest influence on the Federal Reserve. The index has been holding steady since July, hovering around the 3.4% range which is still higher than the Fed’s 2% target. • The Producer Price Index (PPI) tracks prices that manufacturers and wholesalers pay for goods at different stages of production. As such, it is a good leading indicator of the future direction of price changes at the retail level.
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Center for Business and Economic Insight
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