We think we’re in “Phase 3” of a transition for U.S. inflation.
From mid-2021 to mid-2022, the Headline CPI number ramped up from 2% to 9%. Then, over the past 12 months, it came back down to 3%. The release of July numbers yesterday ushered in a period where inflation will pick back up very gradually.
“If you look at the transition from the first half of 2023 to the second half, there’s clearly a change,” explains Josh Steiner in this clip from The Macro Show. “The base effects no longer steepen. In fact, in July and August, they ease.”
Steiner adds: “At a bare minimum, we’re likely to see July and August accelerate in headline inflation. From September to December, the numbers will stay largely sideways. Maybe they’ll go up or down 20 basis points, but taken together, it paints a much different picture than the first half of 2023.”
Watch the full clip above.
