Food (and Energy) for Thought

Elizabeth Spiers, founder of, has some interesting if not totally original things to say about inflation in her column
in the latest issue of Fortune. Her point is that the insistence on focusing on “core” inflation makes the numbers look better because the stuff that’s going up - food and energy - is stripped out.

If we focus on core inflation, we’re told, the underlying trends aren’t so disturbing. Take energy and food out of the basket of goods used to calculate the CPI, which is what the Fed does when it reports the numbers to Congress, and things don’t look so bad. Just look at the spot on the wall, says the Fed, and ignore the giant needle.

She questions whether it is time to accept these volatile sectors as part of the whole.

The fact is, food and energy have been going up for quite a while. At what point does a consistent trend upward stop being “price volatility” and start being a material “trend upward”? And what if some of those trends - particularly in the energy sector - are irreversible?

It is a fair question that’s been batted about before. We found the accompanying graphic particularly compelling. (Sorry it’s so blurry. it’s not your eyes. It’s us. We’re working on it.)

As she says in the piece, quoting a Fusion IQ’s Barry Ritholtz, “If you take everything out of the CPI basket that is going up in price, sure, you have no inflation!”

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Anna Bahney is a Fellow and staff writer for The Audit