Chart of the week: the return of inflation

Investors beware, says Josh Zumbrun on blogs.wsj.com. While the official US consumer price index (CPI) shows that inflation has turned negative, it is a month old by the time it appears. A more up-to-date online reading suggests prices are on the verge of a rebound. The State Street PriceStats inflation index consists of tens of thousands of prices sourced from the internet every day.

It has been a leading indicator of inflation in the past, capturing the impact of the recent plunge in petrol prices before the move showed up in the official inflation basket. The recent rebound in oil has played a part in the strong rise in the PriceStats index, but this isn't just about fuel.

Cheaper gas has begun to bolster consumption, and the upshot is that "retailers' pricing power is returning", reckons Michael Metcalfe of State Street. This has been the case for six weeks and "that would point to inflation having bottomed".

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