Academy Securities strategist Peter Tchir offers a counterintuitive assessment of current US inflation: the core issue facing residents may have shifted from "prices still rising rapidly" to "prices that have already risen haven't come down."
He compares Truflation with official CPI and core PCE, finding that in 2021-2022, Truflation was significantly higher than official data, but now the situation has reversed, with real-time indicators significantly lower than traditional inflation indicators. Based on this, the author questions whether the Federal Reserve, if it continues to rely excessively on the lagging CPI and core PCE, may overestimate the current price pressures.
This view doesn't mean official inflation is distorted. The Fed's July report shows that as of May, PCE was still as high as 4.1% year-on-year, and core PCE was 3.4%, indicating continued inflationary pressure in official data; meanwhile, the latest real-time US CPI indicator, Truflation, is significantly lower.
The real disagreement therefore lies in whether policy should focus more on the "current rate of price change" or the lagging reflection of past price increases in official statistics. If the former is closer to reality, the market's pricing in further interest rate hikes may be more hawkish.
