Thursday, October 11, 2018

Consumer Price Index (CPI) forecast performance

The latest CPI data was released today, and is basically in line with the dynamic information equilibrium forecast of inflation I've been tracking since 2017 (click to enlarge):

The dashed line shows a later estimate of the 2014 shock parameters from March of 2018. It has negligible effect on the rate of inflation, but did impact the price level (i.e. the integrated effect on the rate of inflation):

Basically, the shock was a bit smaller than the estimate from early 2017 (which was made while the shock was still underway).

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