Today Calculated Risk noted that, "inflation expectation have surged recently." They cite a Bloomberg article that charts the spread between the 5-year TIPS and the 5-year Treasury. You can find an interactive chart of the spread between those two rates on the Cleveland Fed's website.
At this point, I think it's safe to say that - contrary to what the FOMC has to say - both inflation and inflation expectations are not well contained.
Annual core PPI inflation has moved from its 2006 lows near 1% to hovering above 2% in the second half of 2007.
Core PCE inflation has jumped back above 2% and trimmed-mean PCE inflation is nearing 2.5%.
CPI inflation is worst of all; core is near 2.75%, 16% trimmed-mean is approaching 3%, and the median CPI is closing on 3.25%.
And just wait until Bush invades Iran in a few months, and then the Democrats take the White House and pull out of Iraq. Oil will be $160 a barrel!
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