The first graph shows alternative measures of “core” CPI inflation. Note: It´s a good thing that inflation turned up following QE2. In that sense, QE2 is working. More significantly, if most were happy with the inflation observed in 2005-2007, the present level of inflation is “bad”, especially because it is the result of a deep plunge in nominal demand (AD).
Figure 2 shows that there is “heat” and “light” concerning inflation. This comes from the Atlanta Fed Inflation Project. They calculate (both for the CPI and the CPI-Core) the rate of inflation for the “flexible” and “sticky” components. We observe it´s “dangerous” to pay undue attention to the “heat” generated by the flexible component. This may have been the BIG mistake made by the Fed in 2008!
Figure 3 illustrates the fact that when you are inside an inflation process, like in the 1970s, ALL prices move in the same direction. “Sticky” prices become “unstuck”, the hallmark of an ongoing inflation process.