Inflation cools down faster than the market expected

Source: CritpoTendencia Original Title: Inflation Cools Down Faster Than Market Expected Original Link: Markets are not only reacting to official data. They respond to emerging trends before consensus shifts. In this realm operates the Truflation Index, an alternative metric that, despite being noisy, often provides early signals about the actual price dynamics.

One thing that is catching my eye is the rapid deceleration in the Truflation index. It’s a noisy series and one that I’m not going hang my hat on too much, but the year-over-year rate is now down to 1.72%, while the Truflation core index yoy change has fallen to 1.60%.

In recent weeks, one of these signals has clearly stood out: the year-over-year slowdown in inflation measured by Truflation was rapid and consistent. The year-over-year rate dropped to 1.72%, while the core index stood at 1.60%.

This is not an isolated reading nor a simple statistical adjustment. It’s a movement that warrants attention, even for those who do not base their decisions on a single metric.

What matters is not just the level, but the speed of the adjustment, a factor that often modifies expectations before official narratives change.

Expectations, TIPS, and the market’s implicit message

When overlaying the evolution of Truflation with the inflation expectations implied by TIPS, the message becomes more interesting. Throughout 2024 and early 2025, the break-even curves remained relatively stable, even when official data showed some rigidity.

Now the contrast is clear. While TIPS suggest future inflation around 2.6%, Truflation is falling toward significantly lower levels. This gap does not confirm a recession but points to a decompression of price pressures that the market has not fully priced in yet.

In these scenarios, the adjustment rarely comes first through statements or formal decisions. It usually appears earlier in asset prices, sector rotations, and subtle shifts in macro narratives.

The silent factor: productivity, technology, and AI

The most interesting insight is not just in the data but in the potential structural cause. Artificial intelligence does not impact inflation immediately. It first influences efficiency, automation, marginal cost reduction, and time compression. Then, slowly, these effects filter into final prices.

If part of this process is already reflected in alternative metrics like Truflation, the market might be underestimating the magnitude of the productivity change underway. Not as a one-time event, but as a background trend.

This does not mean the inflation problem is solved nor that the cycle is over. It suggests that the macro risk axis could be gradually shifting.

An early signal, not a conclusion

This is not a signal to anticipate immediate monetary policy decisions. Nor is it a definitive confirmation of controlled inflation. It’s simply an early warning.

When alternative indicators, implied expectations, and technological narratives start aligning, the focus shifts from the specific data point to the trend. And today, that trend points toward a faster slowdown than many models currently assume.

This is not a conclusion, but an observation. And in markets, early observations tend to weigh more than late certainties.