CPI – Consumer Price Index Further Analysis … Why it has likely peaked, Tough Comparable

The lead Article in our Q 2 2022 Newsletter, reviewed here along with a Video review as well, spoke to a possible tough comparable slowdown from the over $1 Trillion of stimulus pushed directly into the economy almost exactly one year ago …. and was all about the hurdle coming up from the calendar cross over of that stimulus…

Consumer Price Index (CPI) Not Immune to Comparable

In a very similar vein as the above mentioned hurdle, the inflation index gauge/CPI that many follow (Especially the FOMC) closely has a very similar hurdle event occurring…..

Notice the very large annual increases in January and February of 2022? (Orange Bar) But look close at the relatively benign reading from the prior year (tiny blue bars) … That benign reading is the base comparison at which the index comped…

Pretty easy to see as we go further into the year, the base comparisons are much harder (blue bars rising fast)….

As detailed here on our “Make UP of the CPI’ there are components that have risen a lot … think oil and rent (here is a great discussion we had on rent increases directly), which has a lag effect of coming into the system

These increases are not likely to be enough to cover the tough comps…..

Bottom Line: Likely to see peak CPI numbers within the next few readings….

Lastly, while the CPI may normalize, many if not most inflated items (wages, food, consumer services) will likely stay at the current level…. but not continue upward…

As the FOMC led by Jerome Powell attempt to lower this number, a natural slowing may already be a tailwind.

Have a Great “CPI Likely Peaking” Day!

John A. Kvale CFA. CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



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