Today's Top Stories From the Breitbart News Desk

The word of the day was "moderated." The Consumer Price Index came in at one of the highest levels in 20 years, but because it was largely in line with elevated expectations and below the jaw-dropping inflation seen a month earlier, the established financial media instructed the public that inflation had "moderated.”

It might be better to think of inflation as having broadened into a more sustainable shape than the very spiky levels seen in the May and June reports. Recall that used car prices jumped 10 percent in June after rising 7.3 percent in May. That sort of thing cannot go on forever. At some level, consumers will balk at paying higher prices. With used cars, the price cap is probably somewhere below the price of a new car. Otherwise, you could do a good business buying new cars, holding them for a few months, and then upselling them as used cars—a process one internet wit termed carbitrage.

The Cleveland Fed's measures of median and trimmed-mean inflation, which exclude the prices that make extreme moves, showed year over year inflation was higher in July than June. That is an indication that price inflation is broadening out from the items with the most price flexibility to those with less flexibility. Reluctant price hikers—such as low-margin big box stores—have started to pass on price hikes. And judging from recent commentary on earnings calls, they are likely to keep doing so.

There are also troubling signs that inflation may be being slowed not because supply is rising but because demand is falling. A quick look at TSA travel stats show that airport check-throughs have stagnated or even fallen. CPI data showed that rental cars and airline tickets are less expensive. Bank of America economists Michelle Meyer and Stephen Juneau pointed out in a note Wednesday that seated diners on the OpenTable network were down 9.4 percent from 2019, a 3 percentage point decline from the previous week. The likely cause: fear of the Delta Variant. "The weekly decline was led by a 4.8 percentage point drop in the virus-stricken South," Meyer and Juneau write.

Perhaps the most positive development on the inflation front is that there is less denial. When we started warning about inflation months ago, many economists were still in a trance of complacency bred from a decade and a half of low inflation. As a result, actual inflation kept coming in higher than forecasts. Now the forecasts have come into line with reality.

– Alex Marlow & John Carney
Breitbart News Network