The word inflation is often misunderstood by many investors. Even economists tend to disagree on how to best decipher inflation or how to best calculate it. The concept of inflation also takes the form of personalization, a notion that is largely overlooked. Simply because a particular inflationary reading indicates a certain level of price gains, or declines, it likely means very little to how it will impact you personally. No two individuals exhibit identical consumption patterns. An additional factor that skews inflation, in our view, is the impact of outliers in the data, which is the main purpose of this brief analysis. To gain a better understanding of that, we will focus on the core Consumer Price Index (CPI), which is among one of the most accepted forms of inflationary measures. The chart below on the left depicts the regular monthly annualized CPI reading while the chart on the right is showcasing the same data but on a mean-trimmed basis. Mean-trimmed refers to a CPI reading that has been stripped of its outlier data points, which are defined as price changes above their 92nd percentile and those below the 8th percentile. Without getting into granular calculation details, think of it as a measure that has been stripped of a handful of data points capable of inadvertently skewing inflationary readings in away that provides minimal data usability, or even relevance. Excessive swings in single data points occur often and they can be related to things like hotel room prices, rental car prices, gas prices, corn prices, or any other mix of cyclical components that may indicate short-term swings, most of which are often unsustainable and likely to normalize. Be that as it may, short-term headline shock in the traditional CPI occurs often and we would argue that it is flawed and can be misleading. The charts below help define that explanation graphically. Both charts reflect the same scale and time frame, yet their individual volatility is drastically different. Such a difference is solely a function of removing the short-term impact of a few data points that likely maintain a minimal medium-term negative outcome. In our view, investors should use caution with traditional measures of CPI and focus on the mean-trimmed version. We believe it provides a better version of inflationary pressures and provides a fundamental understanding of investment risk tied to inflation. At the end of the day, inflation is stable, not transitory. The only transitory factors are tied to erratic short-term data points, which we believe should be ignored.