Inflation Reaccelerating in Recent Months

Apollo Chief Economist

Key measures of inflation have reaccelerated in recent months, and supercore inflation at 4% is too high compared with the Fed’s 2% inflation target, see charts below.

The bottom line is that it is too early for the Fed to declare victory over inflation, and the Fed needs to slow down the economy further to get inflation under control.

The implication for investors is that the Fed will keep rates high until nonfarm payrolls go negative, because that is what is needed to get inflation under control, and this fact is generally underappreciated in markets.

Inflation is picking back up
Source: BLS, Haver Analytics, Apollo Chief Economist
Supercore inflation is rising month to month
Source: BLS, Haver Analytics, Apollo Chief Economist
Supercore inflation is too high
Source: BLS, Haver Analytics, Apollo Chief Economist

Download hi-res chart(s)

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