We continue reporting on the evolution of the difference between core CPI and the index for food (beverages not included). In several previous posts, we confirmed that this difference had been following a long-term (negative) quasi-linear trend since 2001. There is no important change so far.
In 2008, the trend line was much steeper than predicted and crossed the zero line. In the beginning of 2009, the trend reached the bottom and turned to a positive one, although not for long. The growth in food prices restarted in 2010 and has been in place since.
In June 2011, the trend (black) line crosses the zero line in the end of 2010. Therefore, Figure 1 demonstrates that the difference between the core CPI and the index of food has been slowly approaching to its original trend (red line) since 2009.
Here we suggest that the intercept with the zero line and the pivot to the decreasing food price may start any time in 2011 or 2012 depending on the bottom (resistance) level. Since the previous negative/positive pivot was at the level of -10, as displayed in Figure 2, one cannot exclude that the negative trend may change only after 2016. This case is less likely, however.