The Trimmed Mean throws out the highs and lows
The Dallas Fed trimmed mean PCE price index for July increase from 2.4% to 3.2% (annualized change. That is the highest level since April 2000 in 19 when it reached 3.3%
The trimmed mean over the last 12 months came in at 2.0% while the BEA says the PCE inflation rate was 4.2% on a 12 month basis with the core inflation at 3.6% on a 12 month basis.
According to the Dallas Fed:
In any given month, the rate of inflation in a price index like the Consumer Price Index or Personal Consumption Expenditures (PCE) can be thought of as a weighted average, or mean, of the rates of change in the prices of all the goods and services that make up the index. Calculating the trimmed mean PCE inflation rate for a given month involves looking at the price changes for each of the individual components of personal consumption expenditures. The individual price changes are sorted in ascending order from "fell the most" to "rose the most," and a certain fraction of the most extreme observations at both ends of the spectrum are thrown out, or "trimmed." The inflation rate is then calculated as a weighted average of the remaining components.
The sharp rises indicative of a overall shift of prices in the belly of the components to the upside.
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