Demand Destruction Slows Inflation Fast (Patreon)

The CPI’s 12-month rate of change is inflated by big jumps in June and October of 2021 and March of this year. As a result, the 12-month rate of change will remain high regardless of what happens to the CPI over the next couple of months. One illustration of this: even if the CPI had remained unchanged from March to April, the headline number for April would still have been 7.9%.

This puts the current discussion about inflation in an entirely different light. The month-to-month inflation rate doesn’t have to get any lower than it was in April in order for the CPI’s 12-month rate of change to fall to 4.1% — once the past year’s big spikes in inflation drop out of the trailing 12-month period.