It's all about what you pay for things, not the rate of inflation. As you say, a $4 cup of coffee is more than a $3 cup of coffee, even though $4 may eventually become the reference price. A perfect example is in the U.S. housing market, where despite the housing shortage, it all boils down to a comparison between monthly rent and monthly mortgage payment. Whichever is less is winning the race. Excellent analysis as always.
It's all about what you pay for things, not the rate of inflation. As you say, a $4 cup of coffee is more than a $3 cup of coffee, even though $4 may eventually become the reference price. A perfect example is in the U.S. housing market, where despite the housing shortage, it all boils down to a comparison between monthly rent and monthly mortgage payment. Whichever is less is winning the race. Excellent analysis as always.