Unless we know how things are counted, we don’t know if it’s wise to count on the numbers. – John Allen Paulos
Unless we know how things are counted, we don’t know if it’s wise to count on the numbers.
Inflation is increasingly treated as a settled issue. The official inflation reading, the Consumer Price Index (CPI), has slowed meaningfully from its peak in 2022, with year-over-year measures reinforcing the view that price pressures have largely passed. Investors have embraced that interpretation, policymakers have cited it as evidence of progress, and asset allocation decisions increasingly reflect confidence that the recent inflation chapter is now closed.
But the CPI is not inflation itself. It reflects past price movements, not emerging pressures.
Over long periods, consumer prices and commodity prices tend to move together. Commodities sit upstream in the inflation process, and sustained moves in inputs have historically lagged showing up in the CPI. When commodities rise, inflation pressure follows. When they fall, it usually fades.
Today, that relationship is diverging again. The CPI has cooled, reinforcing the view that inflation risk has faded, while the Bloomberg Commodity Index is reaccelerating. Commodities are firming even as headline inflation data points the other way.
The CPI reflects what has already worked its way through the economy. By construction, it looks backward. Commodities respond in real time to supply, demand, monetary conditions and risk. They tend to move before pricing pressure shows up at the consumer level.
The CPI shows where inflation has been. Commodities show where pressure is forming.
This distinction matters because inflation does not always arrive through consumer prices alone. Commodities often reflect those forces earlier, even when headline inflation appears contained.
This does not mean an inflation scare is imminent or that recent disinflation was illusory. It simply suggests that relying exclusively on the CPI risks missing information elsewhere in the system. When inputs and outcomes diverge, the divergence itself is the signal.
The timing also matters. The beginning of the year is when investors often decide which risks to emphasize and which to dismiss. Calm inflation prints encourage the view that inflation risk no longer needs to be managed. That assumption can become embedded in portfolios long before it is tested. Ignoring commodity signals at this stage could shape positioning in ways that prove difficult to unwind later.
The question is not whether the CPI is right or wrong. It is whether investors are looking at enough information to understand the inflation landscape they are navigating.
Between the Lines is a weekly blog by DoubleLine Portfolio Managers Sam Garza, Joseph Mezyk and Quant Analysts Fei He, CFA and Sunyu Wang that breaks down topical macro and market issues. For questions or suggestions please e-mail us at betweenthelines@doubleline.com. The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of DoubleLine Capital LP, its affiliates or employees.
