Inflation, as measured by the personal consumption expenditure index, the Fed’s preferred measure, was just 0.9% for the year ending 6/16, and core inflation (which removes food and energy) was 1.6%, both below the Fed’s 2% target. However, goods inflation was -1.8%, while services inflation, which faces little overseas competition, was 2.2%. Since services account for 80% of GDP and employment, inflation may well rise even if goods get cheaper.