INFLATION IRRELEVANCY

Inflation fundamentals are stellar. Strip out lagging rents, and the remaining 93% of the CPI has slowed to a 1.7% Y-o-Y rate and is down to a 1% Y-o-Y rate over the six months to August. Moreover, the CPI on an HICP (harmonized) basis, placing the index on the same footing as Europe, came in at 0.1% M-o-M in August and has run below 0.2% every month since April.