Good morning. Welcome to Axios today. It's Friday, June 11th. I'm Nailibutu. Here's how we're

making you smarter today. President Biden strikes a different tone on the world stage. Plus, this year's

earlier cold in flu season. But first, today's one big thing. Why it's still too soon to worry about

inflation. The consumer price index released yesterday shows prices for food, energy, and products

like use cars increased 5 percent compared to May of 2020. It's the biggest year-over-year increase

in almost 13 years. Axios' chief financial correspondent, Felix Salmon, has so far told us we

do not need to worry about inflation. Felix, good morning. Would you like to retract your stance

on not worrying about inflation? It's far too early in the morning for me to be retracting any

stances. I'm just going to roll out of bed and say, no, I'm not retracting anything, because Nailibutu,

do you know what the base effect is? I don't. A base effect is that when you're looking at what

you just cited, the 5 percent was a year-over-year figure, right? You look at where the price level was in

May this year compared to where the price level was in May 2020. Now, do you remember May 2020?

May 2020 was absolutely, I believe, the technical term is crazy pants. If you're comparing things

now to May 2020, you're going to get a whole bunch of really weird artifacts. For instance,

no one in the right mind was thinking I should go out and buy a used car in May 2020. So

used car prices compared to a year ago seem like they've gone up a lot, but that doesn't mean

inflation. That just means we've got back to normal. So I want to ask you about one other thing,

because if prices going up, which we are seeing prices going up compared to last year,

there were reports yesterday of companies like Starbucks running out of key supplies. How much of

this also has to do with our supply chain issues? A lot. A huge amount of what we're seeing in these

inflation figures is really concentrated in a handful of places which are struggling with

supply chain shortages. The pandemic created massive disruptions to the supply chain,

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