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As Lance explained recently on one of his daily shows (I never fully realized this), inflation is measured year over year as the delta from levels 12 months prior.

What that essentially means is once the “compare to” (baseline # from twelve months ago) is higher, inflation itself will be lower.

Earlier this year, we were comparing prices to much lower 12-month ago baseline #s than we are now. That’s because costs started to really creep up last Apr/May but were flatter in Feb-March. So, part of the reason the recent CPI # came “down” was that the 8.3 (vs 8.5 previous) calculation was from a higher April baseline than say, the Feb 21 - Feb 22 comparison.

As an example: if a gallon of gas is $5 today and $5 a year from now, that’d be a ZERO rate of inflation in the price of gas. However, if a year from now gas is $6/gal, you have 20% inflation in the price of gas. If gas goes down to $4, you have 20% disinflation in the price of gas.

Things do not necessarily “go back” to lower prices when inflation goes down. What inflation going down ACTUALLY means is that the rate of increase, year over year, is smaller.

For that reason, we are highly likely to have 8+% inflation in 23, because prices would have to go up ANOTHER 8% over the 8.3 - 8.5% they went up from 21-22 for that to happen.

Many economists are forecasting 4’ish% inflation by EOY 22. I believe Lance’s firm is a bit more pessimistic and forecasting 5.5 but don’t quote me on that.

Bottom line - gas, meat and a bunch of other stuff can stay just as expensive as it is now 12 months from now, and inflation could actually be back “down” to 2-3% or even lower. We would need DISinflation for prices to return to what they were before recent increases..

All that’s because inflation is the *rate of change* over prices 12 months earlier, not an indicator of how expensive things are or aren’t.