Lumber prices are falling - and that means there's no need to fret about inflation, top economist David Rosenberg suggests

David Rosenberg brushed off inflation fears again by pointing to falling lumber and natural gas prices.

The veteran economist has repeatedly dismissed inflation as a threat since late last year. He has argued that the upward pressure on consumer costs has now faded, saying it’s “in the rear-view mirror,” while forecasting the rate of price increases could cool down below 2% by the third quarter of 2023.

This time around, the Rosenberg Research president has seemingly mocked fears about consumer-price pressures by questioning their existence outright in a Monday tweet,

“Inflation?” he asked. “Maybe in wages in 25% of the economy - the select low-skilled service sectors the Fed is focused on. Meanwhile, the likes of lumber and nat gas are quickly heading back to their cycle lows and both down more than -70% from the nearby peaks,” he added.

US natural gas prices plunged 13% on Monday as a streak of mild winter weather hurt demand. So far this year, prices have tanked 34% on crimped demand. Meanwhile, lumber prices have been on a steep decline, falling about 22% over the past month as a housing slowdown sapped demand.

The drop in such prices build on a trend of falling inflation that’s in place since mid-2022. The annual rate of consumer-price increases hit a 40-year high of 9.1% last summer, spurring the Federal Reserve to boost rates from nearly zero to just below 5% in the past year. That has seen price pressures ease somewhat in recent months, with the latest reading coming in at 6.4% through January.

Fed Chair Jerome Powell has acknowledged the trend as a sign that a disinflationary process has begun, although still in early stages.

Rosenberg’s optimism on inflation balances out with his warnings that the US economy will slump into recession this year. The economist dashed hopes of a “no landing” scenario and has predicted a painful downturn that will take hold in the second quarter.