The twelve charts that accompany this piece visually examine what is and is not driving contemporary inflation across the major categories that the standard inflation indices break the economy into. The decompositions tell a more nuanced story than the headline numbers permit.
The headline rate
The first chart traces the headline inflation rate across the past five years. The trajectory is familiar: the post-pandemic surge, the gradual moderation, the persistence at levels above the long-run target.
The major decompositions
The next four charts decompose the headline rate into its major constituent categories: goods, services, housing, and energy. The decompositions show clearly that the persistence in the headline rate has been concentrated in services, with housing as the single largest contributor within services.
The services drill-down
The following four charts drill down into the services category. The patterns within services are not uniform. Healthcare services and education services have produced sustained increases; transportation services and recreation services have moderated meaningfully. The aggregate services figure obscures the variation within it.
The international comparison
The next two charts compare the U.S. inflation pattern to the patterns in the major comparable economies. The patterns are more similar than the popular commentary often acknowledges; the U.S. is not, on the data, an outlier in either direction.
The wage chart
The final chart layers in the wage data. The relationship between wage growth and price growth across the period has been roughly proportional, with wage growth slightly outpacing price growth across most of the past two years. The pattern is the kind of pattern the policy framework has been targeting.
What the charts together show
What the charts together show is that the inflation picture is more nuanced than either the alarming or the reassuring headline framings suggest. Specific components of the picture remain genuine concerns; specific other components have moderated more cleanly than the broader narrative implies.
