In yesterday's ISM report, the commodities survey of the report showed that thirteen commodities saw price increases during the month of November, and zero commodities showing price declines. Below we plot the monthly net number of commodities rising in price and compare its three month moving average to the y/y CPI. As we have noted in the past, trends in the direction of the ISM Commodities survey have often been good leading indicators of trends in inflation.
Based on this indicator, even though yesterday's report showed an increase in the number of commodities with rising prices, the trend still remains down. This implies that the inflation rate, as measured by the CPI will also resume its downtrend from its 2005 highs.