Peak Inflation?

Inflation hasn't meaningfully begun to slow yet. Right now, all we have are various reasons why inflation should slow:

• Monetary conditions are tighter.

• Fiscal policy has tightened significantly (with income tax collections higher than expected)

• Covid restrictions have largely gone away

• Supply chains generally seem to be improving

• Freight costs are going down

When supply exceeds demand, inflation goes down. Earlier today the US retail giant Target predicted price discounting as a means of reducing excess inventory - announcing a series of measures to combat inflation. This will not come without an impact to retail profits but may be a step in the right direction to a cool-off in prices.

It all looks promising in theory! Now it's just a matter of the data showing up in practice.