As you may know, I am no economist – I am not even an aspiring economist. My thoughts on the profession of economics are well known. However, I do like data and I do like asking questions about the data I find.
I was reviewing the performance of a basket of commodities over the last month and generated the chart below.
As you can see the performance of most commodities this month has been very poor – I accept that many are coming off peaks but the performance is still poor with the majority of them generating negative performance. This leads me to ask the simple question where does inflation come from in the current environment as it is clearly not coming from runway commodity prices. If in my simple mind it is not coming from commodity prices directly then it must be coming from an external source and the only one I can think of is that it is largely a supply chain issue. This means quite simply – fix that and prices will fall even further.
The current state of commodities, in general, can be viewed through the lens of the CRB Index – granted this is an imperfect measure because of its construction but it still gives an indication of where we are historically.
I will leave it to others to prognosticate what the result of removing the inflation bogey might be – prediction is not my thing.