US inflation is diverging from the Fed’s target: US CPI Inflation has surged +30.2% since January 2020, to an all-time high. This translates into an annualized inflation rate of +4.0% over this period. Meanwhile, under a steady 2% annual inflation target, cumulative CPI growth would have been just +14.3%. In other words, actual cumulative inflation is +15.9 percentage points above the target path, more than double the implied increase. This comes as CPI has remained above 2% for 67 consecutive months. The gap began widening again in March, as inflation has now remained above 3% for 7 consecutive months. Asset owners are the only winners.