• As reflation develops, it’s worth asking what the current “true” run rate for inflation in the United States is, stripping out various distortions;

• Indeed, Core CPI in October reached 4.6%YoY. But this contains base effects, and is distorted (upward by used Cars and trucks; and downward due to the slow adjustment of Housing Costs in the price index);

• What then is a reasonable estimate for sequential Core CPI in the US at this time? And is inflation accelerating?

Last month, we noted the changing composition of inflation globally, driven by traded goods prices during the recovery from the pandemic—with service inflation pressures yet to emerge.

This month, we instead narrow in on the forces driving inflation in the United States and ask: what is the true pace of Core CPI at this time?