I recently came across an interesting analysis of inflation data, and it feels like many people may be overlooking some details.

The US March CPI recorded the largest monthly increase since 2022. That looks scary, but if you look closely, core CPI is basically unchanged. So what does that mean? Simply put, inflationary pressure hasn’t truly worked its way into the entire economic system—it’s more like period-specific fluctuations.

According to observations from CryptoQuant analysts, this kind of structural divergence actually reveals a very key signal. If you focus only on the headline CPI numbers, it’s easy to get frightened, but when you combine core CPI with subsequent PCE data, the story becomes different. Inflation may be driven more by short-term shocks caused by geopolitical conditions rather than by a problem with the economy itself.

But there’s a risk point worth being alert to here. If geopolitical conflicts continue to escalate and drag on for the long term, the situation could become complicated. Short-term inflation fluctuations may gradually evolve into systemic risk—in that case, economic growth would be held back, and the Federal Reserve would have little choice. The possibility of the US raising interest rates could come back onto the agenda.

In other words, inflation right now isn’t the most terrifying part. What’s scary is if geopolitical conflicts never end, inflation shifts from being temporary to becoming structural, and the Federal Reserve is forced to take aggressive measures like US interest-rate hikes to respond—because that’s when the impact on asset prices would be truly significant.

So in the short term, the data isn’t that pessimistic. But uncertainty over the long term really is increasing, which is also why market sentiment has been more volatile recently.