BRIAN KANTOR: Inflation in the US. What inflation?
The Fed underestimated it on the way up, and overestimated on the way down
There has been no increase in prices in the US over the six months to December. The headline inflation rate peaked at 9.1% in June, and then fell rapidly to 6.5% at the latest count in December. In other words, month to month the consumer price index (CPI) is now falling, not rising.
US CPI not seasonally adjusted was no higher in December than it was in June. The seasonally adjusted version was only slightly higher over the six months, and both versions fell in December. If the monthly change in CPI remains at these levels for a further six months, headline inflation will recede (gradually) to close to zero by June. By year end talk may well be of the dangers of deflation, not inflation...
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