Consumer Numbers Turn Up the Heat

Watch the (Un)Employment Numbers

The bad consumer price news we got Friday easily outweighs the good wholesale price and spending news we got Thursday.

The one thing policymakers most don't want to see is the underlying consumer price trend moving higher.

Yet that's what happening.

(a) The year-on-year increase in the core (excluding food and energy) Consumer Price Index rose to 2.5% last month from 2.4% in July. This thing troughed at a 1.9% rate back in January, and we haven't seen the likes of its August pace since September 1998.

(b) The year-on-year increase in the all-items-less-energy index popped to 2.6% last month from 2.4% in July. This thing troughed at a 1.9% rate back in January, and we haven't seen the likes of its August pace since May 1997.

(c) The year-on-year increase in the services-less-energy-services index popped to 3.5% last month from 3.3% in July. This thing troughed at a 2.5% rate in October 1999, and we haven't seen the likes of its August pace since December 1995.

(d) The year-on-year increase in the services index rose to 3.6% last month from 3.5% in July. This thing troughed at a 2.4% rate in June 1999, and we haven't seen the likes of its August pace since June 1995.

(e) The year-on-year increase in the medical care index rose to 4.2% last month from 4.1% in July. This thing troughed at a 3.4% rate in September 1999, and we haven't seen the likes of its August pace since October 1995.

These five key indices are accelerating relatively slowly, and they're coming from relatively low bases -- but they're accelerating nonetheless. As such, policymakers are highly unlikely to move to a neutral directive when they meet next month.

Longer term? If these indices continue along the trajectories they're on now, the next move in the fed funds rate (save some crisis that produces sudden action either way) -- whenever it comes -- most certainly will be up.

Side Dish (or Romeo and Juliet)

Yo!! This is the last day of our acquaintance. The site and I are parting ways.

I want to thank from the bottom of my bagel everyone who thought the column worthy of a click (even if only to go straight to the polls ... and special thanks to the non-sissies who opted for the you-suck-go-die-type entree every time it was served). I enjoyed your mail and writing with you more than I can say. You are one away-weird lot. And that's why I love you so much.

If you need to reach me, I'm always in Wyoming. At least by address. You can get me at [e-mail].

Good luck to you all.

I'm outta here.

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