Krugman thread on CPI

[BootinUp]

Link to tweet

Unrolled thread

Well, I was getting ready to write about why we shouldn't make too much of the monthly CPI decline. Now need to write about not making too much of the monthly rise 1/

The core inflation number is the one that has people worried. But as I've been saying, that's basically shelter. And these days it's a really problematic indicator of what's happening to underlying inflation. 2/

CPI shelter prices are set to rise for quite a while simply because they reflect trends in newly rented housing with a lag. That's not a critique; there are reasons for doing it the way BLS does. But private indicators suggest that the rent surge is leveling off 3/

So this core reading may be telling us about the past, not the future. Given this reading, the Fed will have no choice about continuing to hike, but it shouldn't greatly move your views about how long and how far the hikes will have to go 4/