Paul Krugman: Markets a good indicator of inflation's direction

The latest news on inflation has been pretty good. It has also been extremely weird. And that weirdness is, in a way, the message.

With underlying inflation fairly low but probably still above the Fed’s 2% target, and people still worried that it might go back up, quirky measurement issues can lead to big mood swings that are quickly reversed when the next numbers come in — or sometimes even a few hours after the initial announcement, once knowledgeable people have had some time to dig into the details.

There were two big official inflation reports in the past couple of days: the producer price index (what we used to call wholesale prices) on Tuesday and the consumer price index on Wednesday morning. There was also a private survey from the National Federation of Independent Business that may add some clarity.

So what do I mean by “weirdness”? On Tuesday, I was busy most of the day with plumbers and dentists, so I was able to check in on events and commentary only once in a while. But this enforced limitation on the information flow might actually have given me more perspective. The first thing I saw was a hot PPI, with inflation coming in well above expectations. There was much wailing and rending of garments. Then, as the analysts I follow had time to parse the details, they started to declare that this was actually a good report.

https://www.heraldnet.com/opinion/paul-krugman-markets-a-good-indicator-of-inflations-direction/