INFLATION WATCH getting close to being put on the bank burner

April is proving to be another month where we might not need to be on INFLATION WATCH much longer.

Let's start with the Consumer Price Index report, which showed another month of moderate-but-controllable inflation.

Some good news on inflation: 4.9% (y/y) inflation is the lowest since April 2021.

Grocery prices have been falling for the past 2 months.
Electricity and natural gas also down past 2 months.

There's hope that rents will soon peak, but we're not there yet... pic.twitter.com/agKYpIjBCN

— Heather Long (@byHeatherLong) May 10, 2023

US CPI rose 0.37% in April and was up 4.93% from a year earlier

Six-month annualized change: +3.3%
Three-month annualized change: +3.2% https://t.co/qCgv5nEUrD pic.twitter.com/GPh43y2uwy

— Nick Timiraos (@NickTimiraos) May 10, 2023

If we're consistently at 3-4% inflation while average hourly wages are running at 4-5%, that sounds like a win to me. And that's reflected in the reality that since inflation peaked in June 2022, we've seen real wages go up in most months. Especially among line workers that aren't supervisors.

With those sizable losses from May and June coming off the 12-month totals in the near future, we likely will see year-over-year real wage gains that are in the 1-2% range. Pretty good place to be, at least for those of us with real jobs.

Then on Thursday, we got the report on inflation from the business side. And that looks even better.

Wholesale PPI inflation is now lower than it was five years ago. pic.twitter.com/RTN0GZTyGr

— Steven Dennis (@StevenTDennis) May 11, 2023

Going further up the supply chain, we see that producer prices are down over the last year, and have consistently fallen since last Summer.

So nothing to drive inflation from the producer side. If anything, prices should moderate even more.

And lastly, we got this release from the US Conference Board.

This “leveling up” of the labor market explains why some employers think nobody wants to work even when the share of the prime-age population working is at 20-year highs — the people in bad jobs got better jobs during the pandemic: https://t.co/dVRbABDnT0 pic.twitter.com/3eTnM9egBx

— Coin-er Sen 🪙 (@conorsen) May 11, 2023

Oh, that's why the Fed and related oligarchs aren't happy with the current situation. Can't have those plebes having the upper hand over the "job creators", now can we?

If oil/gas prices stay down, and food prices continue to level off, and the misleading "shelter" index moderates (an index that already doesn't account for the large number of us in fixed-rate mortgage payments, I will add), then we got a healthy economy with real wage growth, multi-decade low unemployment, and inflation that isn't causing economic damage. Why would we want to end the first two to fight a third 'problem" that doesn't even seem to be a problem at this point.