There’s two things going on with US inflation. First, we’re in a seemingly endless run of supply shocks, including COVID in 2020, the spike in oil prices in 2022 after Russia invaded Ukraine, reciprocal tariffs in 2025 and now the war with Iran. Because there’s long and variable lags in how supply shocks feed into inflation, we don’t know where one shock ends and the next one begins, so it’s hard to know what role supply shocks are playing in recent high inflation readings. Second, the pace of underlying inflation may have risen from before the pandemic. If this is going on, it’s distinct from all the ... (full story)