Disinflation Might Be Upon Us

What I want to talk about today is this moral panic we’re having about inflation. I chose the words moral panic for a reason—we had a moral panic about obscene song lyrics in the 1990s, and it turned out to be nothing. I suspect this will turn out to be nothing as well.

I’ll give you two charts: the first is a chart of food inflation, which is turning sharply lower. The conventional wisdom is that food inflation leads to broader inflation.

Source: Bloomberg