right on the money

Fintrend's Moore Inflation Predictor is right on the money again. Bloomberg reported that core inflation was still up 0.2%, but overall inflation was down (see yesterday's post for explanation).

Here's the MIP chart from last month:

Here is the new chart, updated for September inflation:

The new chart clearly predicts lower inflation over the next year than the August chart. It still shows a bounce in November and December, and then a downtrend for the next 10 months. However, the range is very different. Instead of a 3-5% range, the new chart predicts a 2.5-4.5% range.

I think this chart's value is mostly in the directional predictions, rather than quantitative. As seen by today's CPI, the chart predicted the correct direction of inflation, but was off by a considerable order of magnitude. The last chart predicted a 1% drop, but the drop was actually 2%.