As employees work remotely, food prices become a more important driver of wage growth. FAO world food price is now below what it was at the beginning of the Ukraine war.
Growth in the FAO index, plotted 7 months forward, forecasts wage inflation moderating to 3.5% in 2023. Wage growth is the last concern in forecasting a decline to under 2% CPI, and core CPI inflation, as almost all CPI components are clearly in decline. Inflation less than wage growth bodes well for a soft landing.
This New York Post article sums it up well.
Happy Holidays from all of us at IDC Financial Publishing. We wish you the best for a prosperous new year!
John E Rickmeier, CFA