Has Inflation Peaked?


As of right now, it looks like the worst of inflation is behind us based on 1 major leading indicator of inflation, commodity prices.


Commodity prices are believed to be leading indicators that often exhibit measurable changes before the overall economy changes. In addition, commodity prices often respond quickly to economic shocks and variances in supply and demand.


Over the last 2-4 months major commodity prices have started to sell off which was the leading indicator for declining inflation. Gold prices started to move lower in April while oil, soybean, and corn prices started following the downward trend in June. The decline has continued into August which has provided some relief for consumers at grocery stores and gas stations.


The most recent inflation report (YoY July 2022) showed that the annual inflation rate declined to 8.5% which was better than the expected 8.7%. To go further, the 8.5% figure in July was below the June and May figures of 9.1% and 8.6% respectively. Inflation has certainly started its long downward trend which has provided some relief for the stock market. Over the last month the S&P 500 is up 11.23% and the Nasdaq 100 is up 14.11%, this may be a trend that continues if commodity prices continue to fall.