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Commodity prices and PCE inflation

Author

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  • Galina Hale
  • Bart Hobijn
  • Rachna Raina

Abstract

Commodity prices have soared several times in recent years, raising concerns that overall inflation could rise substantially. However, crops, oil, and natural gas make up only about 5% of the cost of U.S. consumer goods and services. Thus, about one percentage point of the 10% cumulative inflation since 2007 reflects price rises in these important commodity categories. When the contribution of these commodities is subtracted from overall inflation, the resulting pattern is remarkably similar to that of core inflation, which excludes food and energy prices.

Suggested Citation

  • Galina Hale & Bart Hobijn & Rachna Raina, 2012. "Commodity prices and PCE inflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may7.
    • Handle: RePEc:fip:fedfel:y:2012:i:may7:n:2012-14
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    Keywords

    Inflation (Finance); Prices;

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