810 months of inflation
(… continuation of the previous episode …)
A few days ago some of you on Twitter, quoting this article from a specialized magazine :
he kindly thanked me for being, shall we say, prepared for the subject, having heard of rockets and feathers on this blog a year ago, in the previous episode of this post. Courteous reader, therefore, to whom I would like to point out that here "rockets and feathers" have been talked about for a long, long time before, I would say at least since the famous " benza paper ", conceived in 2013 and published in 2015 . There is more stuff in this blog, dear readers, than your philosophy can dream of, but I realize that for this very reason there is no time to read them.
Either way, the quote reminded me it was time to get back to one of our favorite topics, inflation (which we call inflation in the headlines to spot the jerks on Twitter). As you know, it's coming down. In the meantime, I'll give you the "bare and raw" graph:
then the one assisted with two lines: one equal to the inflation of June 2022 (in orange), and one equal to the inflation of last June (in gray):
Speaking of rockets and feathers, these two lines show us that in twelve months we have gone from the inflation of January 1986 to that of April 1986 (four months). Be careful though! This does not mean that the decline over the past year has been slower than that experienced in the 1980s. It just means, as can be clearly seen in the graph, that when last June the experts said to me primly "Eh, but now inflation will go down because it's close to the peak!" they were right, except for the negligible detail that the peak would then be reached in October (ie a few months later when they expected it). In short: between January 1986 and April 1986 the road was all downhill. In the last year it was first uphill and then downhill.
It may therefore be interesting to evaluate whether the last nine months of descent from the peak are somehow in the wake of previous experiences. The table below lists the previous major peaks, the absolute decline in inflation over the following months, and the percentage decline:
As it is easy to understand, the absolute fall in inflation is positively correlated to the size of the peak (ie: the higher you go, the faster it goes down). If we had dropped from last October's peak to the absolute velocity experienced after the November 1974 peak we would be at 3.6% inflation. On the other hand, the correlation with the percentage decrease in inflation is weaker, but inverse: the higher the peak, the less significant (on average) the decline in percentage terms. To put some order in these data, I represent them as a scatter diagram:
Given that there is not a very strong correlation (the cloud is very dispersed), the current situation is represented by the red dot. Compared to the magnitude of the starting point, the rate of decline in inflation is above average. In short, the feather this time seems to be "heavier" (or rather more aerodynamic).
I don't know if that's entirely good news. Perhaps it should be read together with the news of the day . But we will necessarily have to talk about this later. Now I have to leave you because TG.
Good continuation.
This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2023/07/810-mesi-di-inflazzione.html on Mon, 31 Jul 2023 08:52:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.