While June remains the likely peak for YoY CPI growth, the core CPI could see renewed peaks in the months ahead, as lagging CPI rent indexes continue to rise. Therefore despite a fall in underlying inflation, there is a risk that the Fed significantly overtightens, and causes a severe recession.
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Underlying inflation down, but lagging CPI…
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While June remains the likely peak for YoY CPI growth, the core CPI could see renewed peaks in the months ahead, as lagging CPI rent indexes continue to rise. Therefore despite a fall in underlying inflation, there is a risk that the Fed significantly overtightens, and causes a severe recession.