VTI - A Critical Mass Of Price Inelasticity As A Source Of Inflation Stickiness

2024-06-14 14:13:30 ET

Summary

• In addition to the often cited factors, we believe price inelastic behavior is keeping inflation from dropping faster.
• We discuss what may be causing price inelasticity and why it might reverse.
• As so much of the market moves based on interest rates, understanding the direction of inflation is key to positioning.

A critical mass of consumers acting in a price inelastic fashion could be a key source of inflation remaining stubbornly high. In this article, we will examine the factors that have likely led to inelastic consumer behavior and discuss why we believe this is starting to reverse. As price elasticity is restored, I anticipate inflation returning to a healthier 2% or lower....

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