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How Simple Math Can Be Casting an Inflation Illusion

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WATCH: "We're expecting the CPIs to tick higher, but I don't think it's a bad story right now," says Brian Weinstein, Morgan Stanley Investment Management’s head of global fixed income.Source: Bloomberg
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No economic question is being debated more hotly right now than whether the U.S. will see a sharp rise in inflation. But the answer at least for a few months is simple: Yes.

Due to the way the government’s inflation metrics are calculated, what will appear to be significant price increases are all but guaranteed. The phenomenon is known as the base effect, a term worth keeping in mind when new figures make the argument even wilder.