Inflation
Inflation is a sustained rise in the general price level — a decline in purchasing power, not a one-off relative-price shock.
Definition
Inflation refers to a decline in purchasing power, not a one-off relative-price shock. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
It frames the cyclical backdrop that equity, credit, and rates desks price into risk budgets. When a decline in purchasing power, not a one-off relative-price shock shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what inflation is saying. If a decline in purchasing power, not a one-off relative-price shock moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Read with revisions, survey soft data, and market-implied paths — prints without the revision cycle mislead. Prefer a short written null hypothesis for Inflation: what would falsify the current reading in the next window?
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