Consumer Price(s) Incalcitrant

At the current seasonally adjusted pace, the core CPI won’t get much better than 2%, maybe pulling up close to 2.5% by May from base effects – and that’s with those at their most favorable (to the inflation case).

The entire set of CPI data is splashed through with disinflation despite what seems to be everything in the world aligning toward meaningful acceleration; it certainly has been described this way.

The core services CPI index “leapt” 1.79% year-over-year, for example, “surging” from February’s dismal 1.23% which in reality looks like this:

Even when you zoom in close, even with base effects, 1.79% remains among the lows; entirely too consistent with the onset of March 2020’s yet-unsolved recession with no paradigm-changing boost in sight.

About the only factor March consumer prices did not have on their side was a full month of the $1400 helicopter model – though the funds were released it wasn’t a completed calendar for Uncle Sam. And that’s the only “downside” from the expected consumer price expectation; half a month with federal direct-to-consumer installments.

The impression anyone gets is that there can’t be a rational thinker who doesn’t think inflation is a foregone conclusion; given all the cash thrown around and other disease-related positive developments, supposedly this thing’s only a matter of time.

Yet, here we are with March 2021 CPI figures (which, we need to keep in mind, are constructed using older techniques and therefore actually represent a more buoyant set of baskets producing the upper bound for estimated broad consumer price levels) and even the gasoline comparisons are underwhelming; everything else is still just blah very much like the real economy.

That’s ultimately the point; while the media is universal and uniform about the certainty written into projected inflationary outcomes, those are in any rational consideration the outliers! On the contrary, global markets – orders of magnitude larger in number as well as on a different planet in terms of importance and track record – remain firm and resolute that even if consumer prices do flash some volatility over the coming months it won’t add up to anything more than that.

Market-based inflation expectations (and not just TIPS breakevens) are plotting economic potential that is entirely too familiar to the recent past, to recent circumstances. Given these CPI estimates being much 2018-like, and their relation to PPI figures, the true consensus opinion about lack of inflation continues undeterred even if consumer prices can’t; because, it appears, consumer prices can’t.

View single page >> |

Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.