Underlying inflation hits scorching new record

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Two economic data intended to cushion underlying price pressures rose sharply in August, indicating that the economy is still experiencing very high inflation.

The Federal Reserve Bank of Cleveland calculates both median inflation and “16 percent trimmed average” inflation, measures that exclude price spikes that counted in the consumer price index to reveal underlying inflationary pressures. Both showed that inflation accelerated in August.

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The median consumer price index, which reflects only measures of CPI’s price changes, rose 0.7 percent from the previous month, accelerating from the 0.5 percent increase recorded in June. The unrounded figure of 0.73789% is the highest ever, slightly more than the previous record of 0.73078 percent in June.

This corresponds to an annual inflation rate of 9.2 percent. That’s the highest ever.

Compared to a year ago, the median CPI has increased by 6.7 percent. That’s also a record high in data dating back to 1983.

The Cleveland Fed’s trimmed average inflation gauge excludes the CPI components that show the most extreme monthly price changes. That is 7.2 percent more than a year ago, also a record that goes back to the early 1980s. Compared to the previous month, this was 0.6 percent higher. That was the fourth highest ever, after May and June this year and October last year. Both were higher than the July figures.

Both the trimmed average and median CPI measures are thought to better reflect underlying inflation — and predict future inflation — than both headline inflation and core inflation. They remove “noise” and remove prices that moved erratically in any given month.