The Cure for High Prices Is High Prices
Commodities were largely responsible for the acute pressures that sent the headline CPI to 8.5% YoY in March . Inflationary pressures are originating upstream, and firms have been able to pass these price increases downstream to consumers because demand has been strong enough to bear it. However, this is changing for a few reasons. C ommodities prices, namely oil, c oming down substantively in April means that March ’s 8.5% YoY reading was likely the peak of inflation. A lso , demand is slowing quickly, and there’s a n important statistical quirk, too. We forecast headline and core CPI slowing to 8.3% and 6.0% YoY in April’s report released May 11 th .