Residual Seasonality in Some Components of PCE Inflation

Policymakers and economists sometimes examine the components of inflation to better understand inflation's behavior. We study the primary components of core PCE inflation for evidence of residual seasonality. To do this, we examine the average one-month percent changes in three categories of seasonally adjusted price data that have been discussed by policymakers: goods excluding food and energy, services excluding energy and housing, and housing. Inflation for goods excluding food and energy and services excluding energy and housing tends to be economically and statistically higher in January than in November and December. Housing inflation does not exhibit residual seasonality. When assessing if inflation has been high or low over short stretches of time, policymakers and economists may want to account for residual seasonality in goods excluding food and energy and services excluding energy and housing.