Inflation Peaking and Prices Peaking are not the same thing! A Quick Refresher in Calculus.

In the following graph, I plot the average price of a basket of goods in a hypothetical economy: Plot.

Question: When did inflation peak? At time A, B, or C?

The answer is B. The reason is that inflation is the derivative, or instantaneous slope, of the price curve depicted. It is not the actual level of the price at a given point in time.

Now let me superimpose inflation onto that first graph, using a different color. Plot 2. It's a bit rough, but you see that inflation peaked even though prices did not. Indeed, prices only peak at point C, at which point we do not have a peak in inflation, but actually deflation! This means inflation turns negative, and prices start to decrease.

If someone claims inflation has peaked, they are saying we are at point B, NOT point C.

Here is the full album.

Thank you for your time.