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Publications
  • 2025
  • Working Paper

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

By: Alberto Cavallo and Gastón García Zavaleta
  • Format:Print
  • | Language:English
  • | Pages:27
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Abstract

We introduce a novel methodology for detecting inflation turning points that combines high-frequency, disaggregated price data with standard structural break techniques to provide policymakers with more precise and timely signals of inflation dynamics. The methodology consists of three key components: measuring inflation as the slope of the log price index rather than using conventional inflation rates, employing structural break techniques to detect shifts in this slope, and leveraging highly disaggregated price indexes to identify trend breaks at a granular level. We apply this approach to study two critical 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 mid-2024. For the U.S., we find significant sectoral inflation accelerations in early 2025, notably in food and furnishings, despite stable aggregate inflation measures. These applications demonstrate the utility of our approach for enhancing real-time inflation monitoring and policy decision-making.

Keywords

Inflation and Deflation; Global Range; Economic Slowdown and Stagnation; Analysis; Price

Citation

Cavallo, Alberto, and Gastón García Zavaleta. "Turning Points in Inflation: A Structural Breaks Approach with Micro Data." Working Paper, May 2025. (Preliminary draft.)
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About The Author

Alberto F. Cavallo

Business, Government and the International Economy
→More Publications

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    Large Shocks Travel Fast

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More from the Authors
  • Tracking the Short-Run Price Impact of U.S. Tariffs By: Alberto Cavallo, Paola Llamas and Franco Vazquez
  • Large Shocks Travel Fast By: Alberto Cavallo, Francesco Lippi and Ken Miyahara
  • Price Discounts and Cheapflation During the Post-Pandemic Inflation Surge By: Alberto Cavallo and Oleksiy Kryvtsov
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