Today’s CPI for the month of September came in mixed relative to expectations as the headline m/m change was inline with expectations (0.3%), while the core print was light (0.1% vs 0.2%).  On a y/y basis, inflation (as measured by the CPI) is running at 1.5% on the headline and 2.2% on a core basis.  Looking at the chart below, September’s headline y/y print was the highest monthly reading since October 2014 and is beginning to show signs of an established trend higher.


While inflation may be trending higher, remember that it remains in what has been an extraordinarily low range.  The chart below shows prior streaks where the headline y/y print was at or below 1.5%.  At 23 months and counting, the current streak is the longest since 1963 and the sixth longest in the last 100 years.  When economists mention the fact that the FOMC would probably tolerate inflation running hot for a period of time before becoming overly concerned, one reason is that over the last two years, it has been exceptionally cold.



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