reader [1] [2] Ask why there seems to be a June 2022 CPI (log) trend breakthrough. My best guess is that oil prices are skyrocketing.
figure 1: CPI (blue, left scale), core CPI (tan, left scale) and WTI oil prices (bold black, right scale), all logarithmic, 2022M02=0. Source: BLS, FRED's EIA, and author's calculations.
While the CPI trend broke out in June 2022, matching peak oil prices, there is no such evidence for core CPI. Use the unit root breakout test (Perron, 1997) to identify trend and intercept breakouts at 2022M04.
Note that core CPI also experienced an outage, although the same test detected an outage in January 2023.
For the world, there is a similar pattern:
figure 2: The CPI of the United States (bold black), the rest of the world (tan), other developed countries (green), and emerging markets (red) are all seasonally adjusted, 2021M01=0. Source: Bureau of Labor Statistics, Federal Reserve Bank of DallasDGEIand the author's calculations.
