1.0Liberty Street Economicshttps://libertystreeteconomics.newyorkfed.orgAnna Sniderhttps://libertystreeteconomics.newyorkfed.org/author/anna-sniderny-frb-org/Inflation Persistence—An Update with December Data - Liberty Street Economicsrich600338<blockquote class="wp-embedded-content" data-secret="0kCfLFNGaI"><a href="https://libertystreeteconomics.newyorkfed.org/2023/02/inflation-persistence-an-update-with-december-data/">Inflation Persistence—An Update with December Data</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://libertystreeteconomics.newyorkfed.org/2023/02/inflation-persistence-an-update-with-december-data/embed/#?secret=0kCfLFNGaI" width="600" height="338" title="“Inflation Persistence—An Update with December Data” — Liberty Street Economics" data-secret="0kCfLFNGaI" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script>
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https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2023/02/LSE_2023_-MCT-inflation-update_almuzara_460.jpg920576This 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.