IT CAN BE SO HARD TO ACKNOWLEDGE YOU WON A WAR:

A long data lag makes these overweighted housing inflation estimates so misleading the Fed Chairman Powell has warned against measuring inflation services without first removing housing. If we look at "CPI less shelter," the average annual rate of inflation over the past ten months was 0.6 percent. And the producer price index (PPI) - which also excludes housing - rose at a similar 0.9 percent rate.

The Fed and media define inflation as each month's increase from a year earlier. But that 12-month average remains exaggerated because annualized inflation rates in May and June of 2022 were 11-14 percent, partly due to the Russia-Ukraine invasion. Once we drop those oldest and most extreme months out of the 12-month year-to-year average, CPI inflation falls to 3.3 percent for the past ten months rather than 4.9 percent for twelve. 

Before that, from April 2021 to June 2022, CPI inflation averaged 8.6 percent. Getting inflation down from 8.6 percent to 3.3 percent belies the cliche about inflation being sticky or stubbornly high. Yet that 3.3 percent figure drops much further - to 0.6 percent - if we exclude shelter. 

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