We also suggested in this and later papers on the sustainable trends in the CPI and PPI (see here) that the negative trend shown in Figure 2 should reach some bottom point and turn to a positive trend. It was also mentioned that such processes in the past had been accompanied by an elevated volatility in the difference, i.e. high amplitude fluctuations.
Now, two years later, we plot the difference again and are happy to conclude that our prediction has realized in practice. We announce the beginning of the positive trend, as Figure 3 shows. The trend should be observed at least five to eight years and will be characterized by a faster growth in prices of goods and services not associated with food and energy. We will keep posting on the difference.
Same pivot is observed in many other, but not all(!), differences mentioned in the original paper.
Figure 3. A positive trend has been emerging since December 2010. The differnce will likely grow from 3 in the beginning of 2010 to 11 in 2016. Accordingly, energy and food will lose their pricing power relative to the core CPI goods and services.