A documented sequence, not a forecast. It states what would falsify it, and where it has failed before.
Trigger
Two consecutive core prints above 0.3% month-on-month, or a jump in expectations
How it runs
- Rate-cut expectations are priced out; the two-year yield rises
- Real yields rise, which is the actual discount rate for equities
- The equity multiple compresses — the effect lands hardest on the longest-duration assets
- Households see real incomes squeezed; low-income spending contracts first and visibly
- Companies that cannot pass costs on see margins fall; those that can are accused of profiteering
- Politics turns against the incumbent, raising the odds of policy intervention in prices
What it means for a household
Everyone with a fixed income loses; borrowers with fixed-rate debt quietly gain as the real value of what they owe falls. The distributional effect is why inflation is politically explosive in a way that unemployment at the same magnitude is not.
What would prove it wrong
Falsifier
Shelter continuing to decelerate. Because shelter is a third of CPI and lags market rents by about a year, a re-acceleration that is not visible in current rent indices will not persist.
Where it has failed
Precedent
Repeatedly through 2023–24: several single-month scares reversed within a quarter because the underlying shelter trend was still falling.
Its neighbourhood
Everything this entry connects to directly. Click any point to follow it.
Watch these to confirm it
If the chain is running, these move in this order.