If you didn't believe us before about the Phillips Curve, how about now? CPI at a decade-plus high with unemployment still at recession levels.
What you're not hearing about today's CPI bombshell
Wednesday, May 12, 2021
It's all base-effects and oil. Now it just has to be transitory.
Update to Strategic View
April's 4.2% year-over-year CPI is not as bad as it sounds. Most of it is explained by base-effects in which today's consumer prices are compared to deflationary lock-down prices a year ago. Without those effects, 4.2% is reduced to 2.6%. The 42 bp not explained by base-effects are explained by oil, which is up 300% year-over-year. Core CPI is precisely back to its prepandemic trendline. Removing base-effects, Core CPI is growing at the prepandemic rate of headline CPI.