The official headline CPI of 2.4% is artificially low due to a measurement error from the October government shutdown. When corrected, the true year-over-year inflation rate is closer to 2.7-2.8%. This means underlying inflation is still hovering near 3%, significantly above the Federal Reserve's 2% target.

After accounting for measurement quirks in both CPI and PCE, the podcast's economists converge on an estimate for "true" underlying inflation around 2.7-2.8%. This consensus view suggests that while official measures are noisy, the underlying trend is still meaningfully above the Fed's 2% target.

The gap between Core PCE (3.3%) and Core CPI (2.5%) inflation is driven by how each index weighs shelter and measures financial services. CPI gives more weight to disinflating shelter, while PCE is inflated by a stock market-linked measure for financial services.

Despite a downside surprise in CPI, the Fed's preferred inflation gauge, Core PCE, is still rising. This growing negative wedge between the two metrics leads to a more hawkish Fed policy than CPI alone would suggest, creating a negative outlook for TIPS in the near term.

Recent bond market volatility stems from a Fed credibility issue, not just rate expectations. Uncertainty over which inflation metric the Fed is targeting (e.g., Core PCE vs. Dallas Trimmed Mean) creates ambiguity about its reaction function, fueling investor fear and raising the term premium.

A measure of "market-based core PCE services ex-housing" inflation is accelerating. This niche metric, which strips out imputed prices and volatile sectors, suggests that core economic activity is generating persistent inflation, challenging narratives focused solely on energy shocks or trade wars.

Official year-over-year CPI figures are misleading due to a government shutdown's data collection issues. By using an annualized three-month moving average to capture current momentum, analysts find that both core and headline inflation are actually running at a 3% rate, suggesting underlying price pressures are stronger than reported.

The surprising 0% change in June's core CPI was driven by noisy, one-off drops in volatile categories like hotel prices (-3%), apparel, and medical care. This cluster of declines created an unusually low reading that doesn't reflect the underlying inflation trend.

"SuperCore" inflation, which measures services excluding energy and shelter, is a key metric for gauging underlying price pressures tied to the labor market. Currently at 2.8% year-over-year, its moderation is seen as a positive sign that inflation is heading in the right direction.