2 Measures of Inflation With a Footnote on Gasoline

Note from dshort: I've update the charts below to include the March Consumer Price Index data from the Bureau of Labor Statistics. I've also calculated the annualized rate of change to two decimal places for more precise comparisons in the close-up charts.

As the charts below illustrate, core CPI and core PCE are both well below the Federal Reserve's 2% target, sometimes referenced as a 1.75%-2% range.

The December 2010 core PCE of 0.73% was the lowest ever recorded. The October 2010 0.61% was the lowest core CPI ever recorded. However we've seen some divergence between the headline and core numbers for both indicators, and the latest CPI data for March shows a wider spread between Core and Headline. If gasoline prices continue to push higher, the spread is likely to widen further in the months ahead. Click to enlarge: