Inflation Risks Are Hiding in Plain Sight

Nobody is predicting 10% inflation in America.

That might be a problem.

Now, let me say up front that I am not explicitly saying 10% is coming. I am, however, saying that there is a credible path to 10%. And even if we don’t hit 10%, we likely have higher inflation in our future.

All because of six inflationary impulses we can already see percolating in the economy.

So that’s today’s dispatch: The path to higher inflation in America, and potentially painfully higher. We’ll walk through the first three today, and we’ll round out the list tomorrow.

Back in the early months of our post-COVID world, I sent a dispatch in which I said we were likely to see 10% inflation before the pandemic-induced inflationary surge was done. We hit 9.1% in the summer of 2022. Like horseshoes and hand grenades, that was pretty close… so I’m gonna call that a win.

The bigger point, though, is the impact that moment had on American families. It’s a modern, real-world hint at what’s likely coming… again.
By summer 2022, Americans were spending about $709 per month more than they were spending before COVID hit.
As soon as free government money stopped flowing in 2023, personal bankruptcies started soaring, one of the delayed effects of high inflation.
Vehicle repossessions surged as families struggled with food, housing, and utility costs and let the monthly car repayment fall by the wayside.
Reliance on credit cards to make ends meet pushed credit-card debt past $1 trillion for the first time.
Now… is that coming again?

Absolutely.

You’re not going to hear that from the mainstream forecasters. They all have inflation running at 2.7% to 4% through the end of 2026. I’m looking out to 2027 and beyond.

Again, to be clear, I am not saying 10% is baked into the cake. But I am saying 10% is possible and that if nothing else, we’re destined for higher inflation higher than the forecasters estimate…

March 2026 headline CPI came in at 3.3% annualized. To push toward 10%, we’d need roughly 6.7 additional percentage points of inflation pressure. Here are the six inputs where that pressure could come from.
The Iranian energy lag.
That hasn’t fully worked through the economy yet. March captured the gasoline spike—up 21.2% in a single month, a 1967-level monthly move.

But energy shocks historically take three to six months to filter into downstream categories like airfare, shipping costs, food processing, plastics, petrochemical-dependent goods, and the like.

Those repricing events haven’t yet arrived.

Conservative estimate: 1 to 1.5 additional points over six months.
Tariff pass-through is still incomplete.
The Fed Board of Governors estimates tariffs have added 0.8% to core Personal Consumption Expenditures (PCE) through February.

The Richmond Fed and others argue that realized pass-through is still incomplete, with another 0.5% likely by mid-year.

And the Minneapolis Fed is reporting now that companies are raising prices in tariff-unaffected categories and they’re using tariff headlines as their cover.

Read that again: Companies that are not impacted by tariffs… are using tariffs to raise prices on consumers. The Minneapolis Fed has found enough examples of that trend that it’s making it into research reports.

Conservative estimate: 1 to 1.5 additional points.
Tariff pass-through is still incomplete.
Electricity rose 11.5% in 2025. The Energy Information Agency projects another 5% in 2026.

In fact, electricity and piped gas were the two largest inflation drivers in 2025. And there are already contracts in place across tens of millions of American families that will see prices rise by double-digit amounts through 2027.

Plus, there’s the $1.4 trillion utility infrastructure buildout planned through 2030… which means the utility providers will be raising rates to cover their infrastructure costs. So, higher utility prices aren’t a one-year bump. They’re a decade-long structural driver hitting consumer prices and every goods-producing business simultaneously.

Conservative estimate: 0.5 to 1 additional point.

Tomorrow, we’ll pick up where we left off today. More to come… sadly.