No Sign Yet of Underlying Inflation Picking Up

And why you should pay attention to core PCE inflation

Markets are jittery because of the April reading of headline year-on-year consumer price inflation of 4.2 percent. That looks like a pretty large number. But it is mostly a base effect. Because consumer prices fell sharply last April, this month’s reading largely reflects growth from that low level. In any case, core CPI inflation is still lower than it…