December Inflation Jumps, Casting Doubt on Soft Landing Base Scenario

Shaking off some of the optimism for a direct path back to 2% CPI, the headline number took a meaningful jump back up to 3.4% after a solid downtrend since August. Restaurant CPI was essentially unchanged, with a basis point blip down but continuing to remain above 5%.

Stabilizing Higher

The prevailing narrative over the past few months has been that of turning the corner to the elusive ‘soft landing’ where inflation returns to 2% without the Fed running the economy into a ditch. Certainly, the economy is in much better shape that most people (including myself) predicted a year ago, with employment & consumer spending remaining strong despite the pressure of higher interest rates. But perhaps a different narrative is starting to emerge, that will never actually be uttered by the Fed or any government officials – and that’s one where 2% inflation is not…