Peak Inflation Revisiting – Big Picture

A month ago, I asked: Has inflation risen to the top? There were persuasive hints that the three main drivers of inflation – automobiles, housing and wages – we have seen the end of broad price increases.

My colleagues Tracy Alloway and Joe Weizenthal, a little tongue in cheek, mentioned a few more specific items whose prices looked up and rolled over: Rolex watches, graphics chips, industrial metals, board apps, trucking, yages, shipping rates, used cars, (some ) House, and wood.

It is not that any of these items are so significant, but rather that in most cases of 2H 2021 and 1H 2022 the types of board price increases are starting to get easier.

Broadly speaking, we see these 6 large categories as encouraging price restraints:

1. Product price: Wood, copper, other industrial metals close significantly from their peaks; Even the energy closed its high.

2. Inventory: Target, Walmart and other retailers have stockpiled lots; Too many things that will lead to discounts in the near future;

3. The price of the house: Bidding war is declining, sales are declining. Homes stay on the market longer and offer many more price reductions More supplies are coming as well.

4. Wages: A growing number of layoffs suggest a reduction in the ability to demand higher wages, especially in the hottest sectors (technology, warehousing, crypto, AI and autonomous driving).

5. Automobile: Production is increasing, and the list of new cars is improving.

6. Travel: Airline ticket prices are coming down in June, see also here

Apollo Group’s Torsten Slock Note:

“The bottom line is that inflation may be higher for another month or two, but considering the trends listed above, the likelihood is rising that inflation may come down faster than market expectations in the second half of this year.”

I agree. Official economic data is released at intervals, and we have probably already surpassed the maximum inflation a month or two ago.

Who is responsible for inflation, 1-15 (June 28, 2022)

Inflation peaks? (May 26, 2022)

Normalization vs. Inflation (March 14, 2022)

Products vs. Services (June 3, 2022)

From chips to Rolexes, 10 things where prices are actually falling
By Joe Wijenthal and Tracy Alloway
Bloomberg, June 26, 2022

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