#55 S2N: A fresh look at inflation

S2N Spotlight

I am currently updating a bunch of charts that broke when I changed my data vendor. I spent the morning rebuilding them and took a completely unbiased view to inflation. I am going to share a bunch of charts, which I personally feel tell us very little other than that we are around the average rate of inflation of the past few decades. I am looking at these charts as a chartist, not as an economist. Sometimes, taking a fresh perspective can be enlightening. I never thought I would say this, but what is the fuss with inflation? It looks normal to me.

The third chart I have titled: Headline vs Core, is the first 2 charts combined into one. The Fed prefers to focus on core, which excludes food and energy.

It is easy to dismiss inflation because an average of 2% seems so small. I actually did the calculation and shrank the size of a Starbucks coffee cup by inflation from 1960 until today. I’m not sure that even qualifies as drinking coffee.

S2N Observations

There were some big moves on Friday, with the US stock market rallying. Bonds also rallied strongly. Crude oil futures have been dropping recently. I am taking note of the upward sloping trendline from April 2020, a break below this line is likely to see further weakness.

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