Core Inflation Rises While Headline Inflation Decreases in the USA! What will be the effect on Bitcoin?

bitcoin‘s and markets’ eyes are on the US inflation data to be released on Thursday.

So, is inflation decreasing in the USA?

Speaking to CNBC, Allianz’s chief economic adviser Mohamed El-Erian shared his forecasts for inflation figures in the US.

The economist, who predicts that annual inflation will fall to 8% with the inflation data to be announced on Thursday this week, stated that inflation is still in an upward cycle despite this.

Pointing out that core inflation increased while headline inflation fell, El-Erian lowered his note that this table shows that we still have an inflation problem.

“Headline inflation will likely fall to around 8%. But core inflation, which measures the drivers of inflation, is rising. This shows that we still have a problem.

Core inflation will decrease at some point, but the question to be asked here is; Is this decline due to a slowdown in the economy? Or will it be with a great recession?”

What Does the Last Quarterly Inflation Data Say?

When we look at the inflation data of the last three months in the USA, we see that annual inflation was announced as 9.1%, 8.5% and 8.3%. While this indicates a decline in inflation, the last three months of core inflation data are as follows: 5.9%, 5.9% and 6.3%.

As you can see, although there is a recession signal in headline inflation, we see that the same signal is not in core inflation, and the increase in core inflation continues.

For this reason, it may be misleading to act only according to the headline inflation, because the FED takes into account the change in core inflation while shaping its monetary policy.

For example, this week headline inflation is expected to be 8.1%, lower than the previous month, while core inflation is expected to be 6.5%, higher than the previous month.

Economists agree that core inflation is a better indicator of the direction of inflation.

This is among the main reasons why the FED did not give any signal of softening in monetary policy despite the decrease in headline inflation in the last three months.

In the light of this information, until a regression signal is received in core inflation. bitcoinIt may not be possible for us to see permanent rises in .

What is Core Inflation?

It is the type of inflation calculated by ignoring the increase in food and energy products from the Consumer Price Index data. The ratio of food energy products in the CPI is 25%.