by Wolf Richter
Wolf Street
Four decades of history say it’s not over until the 2-year yield overshoots the EFFR. It has undershot for a year, and inflation is taking off again.
Inflation surprised in 2023 with its sharp decline, driven by the collapse in energy prices and the drop in durable goods prices. Both of them have come off huge price spikes since mid-2022, pulling down overall CPI inflation from 9.0% in June 2022 to 3.1% in January 2024. But services inflation has remained high and accelerated in late 2023, which was not surprising, and then on top of this increase, it leaped in January by an annualized rate of 8.2%.