MCT Update: Inflation Persistence Declined Significantly in April
![Decorative photo: Closeup of sales receipt](https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2023/05/LSE_2023_MCT-update_may_almuzara_460.jpg?w=920)
This post presents an updated estimate of inflation persistence, following the release of personal consumption expenditure (PCE) price data for April 2023. The estimates are obtained by the Multivariate Core Trend (MCT), a model we introduced on Liberty Street Economics last year and covered most recently in a May post. The MCT is a dynamic factor model estimated on monthly data for the seventeen major sectors of the PCE price index. It decomposes each sector’s inflation as the sum of a common trend, a sector-specific trend, a common transitory shock, and a sector-specific transitory shock. The trend in PCE inflation is constructed as the sum of the common and the sector-specific trends weighted by the expenditure shares.
Inflation Persistence—An Update with December Data
![Decorative image: Digital generated image of vertical bar graph made out of golden cubic blocks with shopping carts standing on them against light blue background. Inflation concept.](https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2023/02/LSE_2023_-MCT-inflation-update_almuzara_460.jpg?w=920)
This post presents an updated estimate of inflation persistence, following the release of personal consumption expenditure (PCE) price data for December 2022. The estimates are obtained by the Multivariate Core Trend (MCT), a model we introduced on Liberty Street Economics last year and covered most recently in a January post. The MCT is a dynamic factor model estimated on monthly data for the seventeen major sectors of the PCE price index. It decomposes each sector’s inflation as the sum of a common trend, a sector-specific trend, a common transitory shock, and a sector-specific transitory shock. The trend in PCE inflation is constructed as the sum of the common and the sector-specific trends weighted by the expenditure shares.