The first two are referring to total CPI, which spiked due to high gas and oil prices, while the third refers to the core CPI (excludes oil and food), which matched forecasts.

So as long as we don’t eat and don’t go anywhere then all will be hunky dorey…

Magic, voodoo, economic words…

I had one course in macro-economics in college: all those damned curves. I swore then and still maintain that it’s all smoke and mirrors.

Science, my ass!

I think that food and energy price changes are treated differently than price changes on other goods. For example, if core inflation (which doesn’t include food and energy prices) shoots up, the Fed will need to raise interest rates to fight off inflation. However, if core inflation is steady, but food and energy are off the charts, it indicates that the economy may hit a rough spot, and the Fed may need to actually cut rates in the not-too-distant future. That’s because energy costs can create a recessionary environment, which will necessitate holding or cutting interest rates in order to moderate or prevent a downturn.

So, the market doesn’t really care about food and energy prices. It cares strongly about core inflation.

I meant to say, “That’s because high energy costs can create a recessionary environment…”

If energy prices continue to go up and remain at a high level for an extended period of time, I believe the market will start to care about that too. What is a high level? Beats me. I don’t really think energy is expensive enough right now to create a recessionary environment, but IANAE (I Am Not An Economist).