~by Sean Paul Kelley

From the Seoul Economic Daily:

The overhaul is expected to partly resolve an unusual gap between PCE and the more widely known Consumer Price Index (CPI). The annual core CPI rate in June was 2.6%, while core PCE was estimated at 3.3%. Typically CPI runs slightly above PCE, but recently the two reversed because of software and investment advisory figures. Both items are expected to show smaller increases after the overhaul.

Why the change? Well, “chipflation” was bldeeding into software.

The SED continues:

For the software price measurement being revised, the BEA uses the BLS computing cost index. But that figure includes items such as USB flash drives. Their prices have surged amid a spike in demand for artificial intelligence (AI). The result was a distortion in which rising hardware prices were reflected in the software index.

For some reason game consoles are included in the software measurement. As I argued on July 14, these numbers are fraudulent. And this story is pretty solid evidence of that reality.