CPI Tends To Overstate Inflation Relative To PCED

August's CPI unnerved the stock market because its core inflation rate was higher than expected. August's PCED will be released on September 30 and is likely to show a lower rate of inflation. Consider the following:

(1) The core CPI inflation rate tends to be higher than the core PCED. That's because the inflation rates of both durable goods (especially furniture & bedding) and medical care services (especially hospitals) tend to run hotter in the former compared to the latter (charts below).