In last Friday’s Bespoke Report, we included a chart showing the y/y change in the national average price of gasoline, highlighting the fact that it ticked into positive territory for the first time in over two years. In the chart below we have taken the chart of the y/y change in gasoline prices and overlaid the y/y change in CPI over that same period. While the two are plotted on different axes, and the sizes of the moves vary, the patterns have tracked each other tick for tick, suggesting that headline inflation may be turning higher.
While gas prices may be pushing headline inflation higher, the FOMC is more focused on core readings of inflation which have had little correlation to gas prices over time. That being said, signs of pricing pressures are increasingly rearing their heads from a number of different areas.