Click on the image to enlarge.
This figure shows that PPI for final demand tracks shelters without CPI very closely. In both ways, inflation is currently very much under control. The problem is that the shelter CPI has risen by 5.6%, making the overall CPI look quite hot.
Some argue that excluding shelters is misleading because they make up such a large portion of the typical household budget. On the other hand, the CPI for shelters is well-known as a lagging indicator for rents due to how they are built and other factors. latest series There has been no recent rent inflation. The latter argument makes me optimistic about inflation.
But I recently made a bet with my friend Larry Ball that the overall CPI would rise by less than 2.5% from February 2024 to February 2025. I am writing a bet here as a kind of contract. I’ll check back next year.
The bet is $5. In name, yes. So in reality, I get more if I win than I do if Larry wins.
