It is incredible to me how few people understand this. Particularly people with finance backgrounds that should know better. The June 2022 CPI showed an increase of over 1.2% (just in June!), equivalent to about 13% inflation at a yearly rate. The last few months have all been in the 0.1%-0.4% range.
Even if you just assume that June 2022 is roughly in-line with March/April/May, that means the June 2022 1.2% falls off the moving average and is replaced with something in the 0.1%-0.4% range. So of course YoY inflation decreases from 4% to 3%. It's just a moving average. Moving averages and YoY numbers make sense to cancel out seasonality and noisy monthly numbers when things are regular. But if there's say, a massive spike in inflation due to supply chain issues, well it's going to take a full year for that spike to disappear from the yearly moving average.
Even if you just assume that June 2022 is roughly in-line with March/April/May, that means the June 2022 1.2% falls off the moving average and is replaced with something in the 0.1%-0.4% range. So of course YoY inflation decreases from 4% to 3%. It's just a moving average. Moving averages and YoY numbers make sense to cancel out seasonality and noisy monthly numbers when things are regular. But if there's say, a massive spike in inflation due to supply chain issues, well it's going to take a full year for that spike to disappear from the yearly moving average.