Why headline US inflation could be about to plunge, in one chart

• If the chart below from Westpac Bank is anything to go by, headline inflation in the US could be about to fall off a cliff.
• It shows US West Texas Intermediate (WTI) crude prices overlaid against US PCE inflation going back to the start of the decade. Both are expressed in six-month annualized percentage terms, with the WTI advanced by two months.
• There’s little doubt that where crude prices move, headline inflation tends to follow.

If the chart below from Westpac Bank is anything to go by, headline inflation in the US could be about to fall off a cliff.

Westpac

It shows US West Texas Intermediate (WTI) crude prices overlaid against US PCE inflation going back to the start of the decade. Both are expressed in six-month annualised percentage terms, with the WTI advanced by two months.

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