Red-Hot US Inflation Is No Longer An Outlier

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by Tyler Durden
Saturday, Jun 11, 2022 - 12:40 AM

Today's US inflation print continued the trend of upside surprises, coming in at 8.6% YoY. In fact, in the past two years, there have been just two occasions when inflation came in below expectations, and judging by the market's reaction, many more upside surprises lie in stock.

Perhaps more importantly, DB's Jim Reid today notes that inflation is not meeting the Fed's test of MoM deceleration that would force a slower path of rate hikes, with headline CPI at 1.0% MoM versus expectations of 0.7% and 0.3% in April.

Yet what may come as a shock to readers, US inflation doesn't really stand out globally any more; in fact, as Reid's Chart of the Day below shows, the US is now just above the middle of the pack when ranked the highest to lowest using 111 countries covering the most up to date data available. In fact, the US is "only" 48th highest on this list.

Compare this to June last year when the US was ranked 28th highest out of 116 and the Eurozone 84th (now only 2 spots below the US). This was soon after the Biden fiscal package and associated helicopter money. Since then YoY US inflation has increased around 3% but many other countries have seen it increase even more.

Just for statistical interest, Reid calculates that the median global inflation is now 7.9% YoY. It was 3.05% last June. Inflation is now truly a global phenomenon with Asian economies generally the least effected. So the shock value from US inflation data has lessened.