Commodity prices and PCE inflation

Galina Hale, Bart Hobijn and Rachna Raina

FRBSF Economic Letter, 2012, issue may7

Abstract: Commodity prices have soared several times in recent years, raising concerns that overall inflation could rise substantially. However, crops, oil, and natural gas make up only about 5% of the cost of U.S. consumer goods and services. Thus, about one percentage point of the 10% cumulative inflation since 2007 reflects price rises in these important commodity categories. When the contribution of these commodities is subtracted from overall inflation, the resulting pattern is remarkably similar to that of core inflation, which excludes food and energy prices.

Keywords: Inflation (Finance); Prices (search for similar items in EconPapers)
Date: 2012
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