Inflation has been a big theme over the last couple of years as the markets have begun to properly price in the combination of obscene money printing and supply chain disruptions that followed the extended lock downs that began in 2020. Many economists and pundits are beginning to point at the CPI prints that have been rolling in over the last few months as a sign that inflation pressures are beginning to subside. I would posit that this may be true if you take the CPI at face value, which no self-respecting individual should do, but if you dig a bit deeper into the numbers and redirect your focus away from those pushing the narrative and toward people actually purchasing goods throughout the economy you may notice that things aren't all well.
Something that should be noted off the bat is the fact that December and January's ~6.5% CPI prints are working off higher base inflation rates set in December 2021 and January 2022. The rate of increase may be a bit lower, but they are building on higher bases. And when you dig into the data the prices of food and energy are still rising at red hot rates with January's numbers coming in at 10.1% and 8.7% respectively. While the aggregate CPI rate may be coming down, the goods that make up a material part of people's monthly expenses, food and energy, are continuing to rise at an alarming rate. Furthermore, the CPI isn't even coming close to capturing the full story of what's going on with the value of the dollar throughout the economy. One thing that isn't being accounted for here in the US or abroad is the quality and quantity of goods that are being delivered to consumers. Prices are going up while the amount of a good a consumer is receiving is shrinking. Shrinkflation is real and it seems to be gathering steam as companies are forced to figure out how to maximize margins as their raw input costs explode.
Here are a number of examples of people pointing out shrinkflation on Twitter.
It's much worse than they're leading on and it's happening across the world right now.
I'm a "take the trash out at 11:00PM on trash night" type of guy