Inflation follows the Natural Gas price

Here is the Australian inflation rate (the orange line) laid over the U.S. Henry Hub Natural Gas price (in blue).

This is another study to support my view of abating inflation.

I introduced this correlation in a post dated September 2, 2022, which was also when we saw a peak in the Natural Gas price.

A year earlier, I was citing that the ‘halving’ of commodity prices (driven by the theory of mean reversion) will be a large factor is providing relief from rising inflation.

But keep any near-term decline in inflation within context that proposed government (infrastructure) spending, lack of industrial and energy capital expenditure, declining commodity inventories (supply), energy transition investments and increased money supply (M2 and M3) all correlate towards being inflationary.

June 29, 2023

by Rob Zdravevski

Karri Asset Advisors

rob@karriasset.com.au