What is going on with inflation? The price and wage data are telling two very different stories. As someone who believes that ultimately prices and wages are linked I view that as mostly reassuring for the inflation outlook--with lots of uncertainty, as always.
The price data shows that the 12-month change core inflation peaked but remains very high. More concerning, however, is inflation has shifted to core services which are more inertial. And trimmed mean and median measures are actually getting worse.
The wage data show that nominal wage growth is slowing rapidly. Although wage and price growth are not tightly linked at a high frequency ultimately they have to be closely related. Also wage growth is a "purer" measure that strips out many of the particular industry stories.
My hopes for a soft landing have been going up but still lots of perilous possibilities on all sides.
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