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.

Chart I

This New York Post article sums it up well.

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