US Inflation Trends

(Published 14 Sep 2023)

RESEARCH CONTENT:

• Until recently, the US experienced a 30 year period of stable low core inflation.

• The recent spike was led by an immediate increase in Choice inflation, followed by Burden inflation.

• Choice inflation has subsequently declined almost back to its 20 year range.

• Burden inflation has also peaked but will disinflate at a slower rate (due to the way it is computed).

• Tight monetary policy has caused a fast deterioration in monetary and consumer debt aggregates.

• Monetary policy objectives target lagging indicators, raising the likelihood of higher rates for longer.

• Current trends suggest a continued disinflationary trend.

• Markets currently price stable inflation at ~2.65% for the next 10 years which is inconsistent with past episodes of monetary tightening.