I fondly remember a time when I didn’t write about inflation every day. It would be good to get back to that, but today is not the day. The U.S. consumer price inflation data for September is with us. With it, I will say tentatively, the debate over whether the current dose of inflation is merely transitory is almost at an end. There’s room for much argument about what should be done about rising prices, but there’s no longer any sensible way to dismiss this inflation episode as merely transitory.

As is customary on these occasions, I will try to illustrate this for you with some charts ... lots of charts. Let’s start with the only inflation numbers most of us used to look at: the headline and core (excluding food and fuel) measures of CPI. Here they are, for the last decade:

The headline number is back to its high of 5.4%, and the core is still above 4.0%, having stopped decreasing. This may well soon pass, but it’s not just a transitory reaction to the pandemic. 

To illustrate, let’s go through some of the alternative measures of inflation that have all become more familiar of late. To start, here is what might be called the “Stepford core inflation rate,” which the Bureau of Labor Statistics started to publish earlier this year. It excludes a whole laundry list of things that many of us generally want to buy: food, energy, shelter, and used cars and trucks:

Excluding all those things reduces the rate, but it’s still above 3%, and barely down from its peak, and it’s still at a level not previously seen in 28 years. The rise in used car prices has been extraordinary, thanks to pandemic interruptions to supply chains, but this is not an inflation scare that goes away if you exclude used cars.

Now let’s look at the “trimmed mean” rate of inflation, as produced by the Cleveland Fed, which excludes the main outliers in both directions, whatever they are. Economists consider this a good and rigorous measure of underlying inflation. And it’s very high:

The trimmed mean rose very sharply for the third month in a row and is far above 3%, the upper range of the Federal Reserve's target. With the exception of two months during the the worst of the oil-price spike that preceded the global financial crisis in 2008, it’s the highest in 30 years. It’s more than four standard deviations above the the norm for the last decade. 

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