Image Source: Pixabay

The single best predictor of future inflation is SCREAMING that another inflationary storm is coming.

The Fed focuses on two inflation measures: the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). 

There are two MAJOR problems with this:

1. Both measures of inflation have numerous gimmicks designed to UNDER-state the true rate of inflation.
2. Both measures are ALSO terrible predictors of future inflation.

What’s astonishing is that the Fed is aware of both of these facts.

You see, back in 2001, the Fed had several researchers dive into the subject of inflation. Their goal was the analyze whether the Fed’s preferred measures of inflation (CPI and PCE) were decent predictors of future inflation. The Fed also investigated a whole slew of other inflation measures for comparison purposes.

The results?

The Fed researchers discovered that both CPI and PCE were TERRIBLE predictors of future inflation. And in fact, the single best predictor of future inflation was food inflation.

See for yourself:

We see that past inflation in food prices has been a better forecaster of future inflation than has the popular core measure [CPI and PCE]…Comparing the past year’s inflation in food prices to the prices of other components that comprise the PCEPI, we find that the food component still ranks the best among them all…

I bring all of this up, because food inflation is now ripping higher.

September’s CPI revealed that “food at home” prices rose 0.3% month over month. This comes to an annualized rate of ~4%... which is WAY over the Fed’s inflation target of 2%. 

On top of this, both “meats, poultry, fish, and eggs” and “non-alcoholic beverages” are clocking in at over 5% year over year!

If you’re looking for a reason why gold has erupted higher this year… and why the $USD has been dropping like a stone, this is it: the financial system is fully aware that another inflationary storm is coming in 2026!

Smart investors are preparing for this NOW, before it hits.

More By This Author: