The chart that has people optimistic on inflation

Prices for Personal Consumption Expenditures

Just a few days ago, the latest reading for consumption expenditures came out. As part of that release, both the nominal and real levels of consumption are reported.

The difference between nominal and real is the effect of price changes and, therefore, a good indicator for inflation related to consumption. Here is what that metric looks like:

In the last month, there was a slight downturn. So, suddenly, there is a lot of speculation that peak inflation is now behind us.

I’ll take the not so optimistic position and say that one month does not make a trend. We’ll have to see what happens in the coming few releases to confirm if inflation is really slowing down. But, here’s hoping!