Image Source: PixabayMonth-on-month services inflation after January 2020 is more persistent than nondurable goods inflation (0.68 vs. 0.38). And services core inflation ex-housing is less persistent, at 0.50.
Figure 1: Month-on-Month CPI headline inflation (black), core (tan), nondurable goods (green), services (red), core services ex-shelter (light blue), all annualized. NBER defined peak-to-trough recession dates shaded gray. Source: BLS, Pawel Skrzypczynski, NBER, and author’s calculations.Interestingly, while nondurables persistence is roughly the same pre- vs. post-pandemic, services persistence is higher in the recent period (0.68 vs. 0.42). In other words, the ranking of inflation persistence by category is not invariant to the sample period, as one would expect since persistence is not a structural parameter.In sum, the AR(1) coefficients for each category (2020M01-2023M09) for m/m inflation are:
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