Did we really turn a corner on inflation?
Posted on July 14, 2023

I read three articles this week saying that we had really good news on inflation. See here, here, here. The market seemed to like this news the past several days. I updated a few of my charts that track inflation. My chart of seasonally adjusted inflation, the most widely reported measure of inflation, did not show that inflation was cooling. Inflation in June was greater than in May. The rate for the last 12-months declined, but we knew that was coming: this June replaced the very high June 22 rate, the highest monthly rate since March 1947.



What was good about the data released on Wednesday? Core Inflation clearly declined: that’s the Consumer Price Index less the volatile food and energy components. It’s been stubbornly high. June was the first big drop in 20 months – roughly 1/3rd May; 1/4th June 2022; and 1/3rd the average of the prior 20 months. One month is clearly not enough for a trend, but the 0.16% increase is an annual rate of less than 2%.


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