In the latest Take 5, Ryan Detrick, Chief Market Strategist, and Sonu Varghese, VP, Global Macro Strategist, examine the recent narrative that inflation is about to spike again — and explain why the actual data says otherwise. While tariff concerns and headline warnings have investors on edge, the duo walks through the consumer price index (CPI), energy dynamics, and how core inflation trends are evolving. Their takeaway? Inflation may not be “heating up” the way some expected — and understanding the difference between lived experience and measured inflation is key.
Key Takeaways
- Inflation Headlines ≠ Inflation Reality Despite media and analyst claims that tariffs would drive inflation higher, recent CPI data continues to show softness.
- Headline vs. Core Inflation While headline inflation has eased partly due to falling gasoline prices, electricity and utility prices have increased — resulting in a muted net impact.
- Market Focus Is on Measured Inflation, Not Perception Ryan and Sonu emphasize that markets react to CPI and official data, not anecdotal or personal experiences of inflation.
- Tariff Effects Haven’t Shown Up Yet While new tariffs are being cited as an inflation risk, Sonu notes that they haven’t yet appeared in CPI data — and their impact may be smaller or delayed.
- Differentiating Between “Inflation” and “Price Level” Inflation measures the rate of price increases, not how expensive things already feel. Even if prices are high, inflation may still be cooling.
- Why This Matters for Fed Policy
With inflation trends flattening or easing, there’s less pressure on the Federal Reserve to keep rates elevated — though future energy shocks could still change the story.
