December 14, 2011: 

The table below tracks annual changes in core PCE, the Federal Reserve's preferred  measure of inflation. Yesterday the Fed said inflation had moderated so I looked up the data.  Sure enough, core PCE peaked in August and has moved lower the past two months.  ECRI's US-FIG is also lower.  In my December 2011 investment letter I wrote:

US-FIG dipped lower to 99.2 in October from 99.7 in September. ECRI said, “After a brief interruption, the USFIG has begun to ease once again. Thus, U.S. inflation pressures are still in a cyclical downswing.” The Fed believes the high inflation (CPI at 3.5%) we see now is “transitory” and will come down in this period of slower economic growth. This should be the case as long as we have high unemployment. The Fed said it believes core (PCE) inflation should be between 1.8% and 2.0% to reach their mandate "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” 

Core PCE Inflation Annualized % Change
Date	Value	Previous
Oct 2011	1.824	1.814
Sep 2011	1.814	1.837
Aug 2011	1.837	1.734
Jul 2011	1.734	1.563
Jun 2011	1.563	1.448
May 2011	1.448	1.301
Apr 2011	1.301	1.146
Mar 2011	1.146	1.212
Feb 2011	1.212	1.142
Jan 2011	1.142	1.019