CPI is Peaking - Odeon's Dick Bove

Odeon Capital's long-time banking analyst Dick Bove said the quick television analysis that today's CPI reading was a concern and inflation is showing no signs of slowing down is "simply dead wrong." Bove said if you look at the non-seasonal adjusted data, it is apparent that inflation is slowing down.

"Many decades ago, I made the decision that the statistics released by the government were attempting to indicate results that were almost impossible to calculate," Bove commented. "Therefore, I would only look at the numbers that had the least statistical manipulation – i.e., the non-seasonal adjusted data. Plus, I wanted to eliminate seasonal impacts, so I only looked at the y-o-y calculations."

Bove said looking at non-seasonal adjusted YoY data, CPI growth is basically where it was in February 2022, and has grown at a slower rate in each of the past 3 months. Meanwhile, PPI is basically where it was 18 months ago and has been growing more slowly for the past three months.

"My view for the past three months has been that inflation has peaked but it will take years to get it back down to the 2.0% level," Bove added. "These numbers support at least one part of this view. The view that labor costs will continue to rise as we head for recession is questionable."

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