Quarterly US Inflation Update

With disinflation strengthening, the Fed needs to be focused on the risk of overshooting.

My latest quarterly US inflation update, which includes an update to my medium-term US CPI forecasts, and an analysis and extrapolation of the latest PCE inflation data, is available to download at the bottom of this page — at 34 pages in total, I hope that you find significant value in this report!

Posted below, is the front-page summary of the report, with relevant charts included.

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UPDATE — The impact of CPI weight revisions on my medium-term forecasts

While many were focused on the BLS’ recent revisions to their seasonal adjustments, the more important update was the change to CPI weights.

In summary, there has been a significant reduction in the weight applied to durables (10.3% vs 12.1% for the December CPI report) and a significan…