Turning Points in Inflation: A Structural Breaks Approach with Micro Data

Alberto Cavallo and Gaston Garcia Zavaleta

No 34102, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses high-frequency, disaggregated price data together with standard structural break techniques to provide policymakers with more timely and precise signals of inflation dynamics. Our contribution lies in leveraging granular datasets to provide early signals of inflation turning points. We measure underlying inflation trends using the slope of the log price index, a choice that helps reduce noise relative to conventional inflation rates, and then employ break-detection methods to identify significant shifts. We apply this framework to study two recent episodes: Argentina’s 2024–2025 disinflation and the inflationary impact of U.S. tariff adjustments in 2025. For Argentina, we detect a broad-based disinflationary turning point in May 2024. For the U.S., we find evidence of a turning point in February 2025, with significant sectoral accelerations despite stable aggregate measures. These case studies highlight the usefulness of applying structural break methods to the slope of price indices for improving real-time inflation monitoring and policy decision-making.

JEL-codes: C22 C55 E31 (search for similar items in EconPapers)
Date: 2025-08
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