Digging into CPI Numbers

Hey All,

After seeing the CPI numbers come in at a hefty 7.5%, I was looking a bit deeper into the CPI numbers, I was curious to know what was driving that. By-and-large, it's the same story we've seen:

  1. Commodities (Food, Energy, etc.)
  2. Transportation Cars

I'm wondering, is this inflation actually more transitory than we think? Commodities can be volatile. If the underlying price increase is driven by supply relative to demand and the associated speculation, would the price that those commodities trade at begin to fall if demand falls? This may take some time, but we've seen spectacular collapses in commodities markets before.

Similar to commodities, once supply chains problems begin to work themselves out, would we expect to see dealerships begin to trim margins or offer deeper discounts as customers have relatively more options?

Now, prices do tend to be sticky and it may be grocery stores will keep their prices as is if the commodity prices drop and they'll pocket the profit, but discount chains could begin forcing price competition.

Source: CPI Home : U.S. Bureau of Labor Statistics (bls.gov)


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