November CPI preview: expecting another fall in YoY growth

Continuing on from my previous CPI previews, the time has arrived for November’s edition. Here’s my 8 key points:

1) Gain a high-level overview by breaking inflation down into three key categories

In order to gain a high level overview of the current inflation, one needs to firstly recognise that it has been marked by some COVID peculiarities. Namely, COVID lockdowns meant that spending on items that are already more elastic to stimulus measures (i.e. durable goods), was further exacerbated. As COVID stimulus checks were handed out whilst people were told to stay at home, spending on durable goods thus surged.

Given that durables were the first to see a rise in demand from the influx of newly printed money, they were the first category to see a large increase in prices. Nondurables followed, whilst the services category was the last to record significant price growth as the economy gradually re-opened. Services price changes also lagged due to the manner in which the CPI records rents.

Gi…