While price increases in 22 commodities sounds high, on a relative basis this is lower than levels we have seen in the recent past, and with only three commodities in short supply, it’s hard to imagine that there is upward price pressure in the pipeline.
The first chart below shows the number of commodities in short supply on a historical basis. As the series shows, there are relatively few commodities in short supply. The second chart compares the net number of commodities rising in price on a monthly basis with the y/y CPI. As the chart details, changes in trends of the CPI have often been led by trend changes in the number of commodities rising/falling in price. Presently, the number of companies rising in price is in a steady downtrend implying that the peak y/y CPI reading we saw in September 2005 may have been the peak of this cycle.