This was a good week for inflation numbers, but whether it can last is the big question

Gas station prices are seen in Bethesda, Maryland on August 11, 2022.

Mandel Ngan | AFP | beautiful pictures

There was more good news on Friday for inflation, as import prices fell more than expected and brought some much-needed relief to consumers.

Report The one-week limit is relatively optimistic for those worried about rising prices – and “relatively” the word activity – as the US is accelerating this year to import just over $4 trillion in goods and services. service this year, according to the latest Bureau of Economic Data Analysis.

With Americans already paying huge bills for food, energy and a host of other commodities in their daily lives, any respite is a welcome one. After all, the 1.4% monthly drop in import prices was only the first time this year, and the year-on-year increase was still more than 8.8%.

That news follows reports earlier in the week that both Wholesale and retail discounts in month. Producer prices fell 0.5% and consumer prices including food and fuel were flat, both figures largely due to sharp slide in most energy complexes.

Everyone’s Attention: The New York Federal Reserve survey released on Monday shows that consumers are expecting inflation to continue at a high level but not as much as in previous months. On Friday, the University of Michigan’s survey of consumer sentiment – whose ups and downs tend to go hand in hand with pump prices – were higher than expected, though still only at a record low hit in November. Six.

‘This is just a report’

Taken together, the numbers are reason for at least some optimism. But perhaps it is wise to keep the glitz.

Consumer price index is still up 8.5% from a year agowhile producer price index rose 9.8% in the same period.

Krishna Guha, head of global policy and central banking strategy for Evercore ISI, warned in a consumer note on CPI that, “while the report is consistent with the view that inflationary pressures end up, the may have peaked, this is just a report.”

Richmond Federal Reserve Chairman Thomas Barkin made similar comments on Friday. The central bank official told CNBC The inflation news was “very welcome,” but added that he saw no reason to pull back on the rate hikes that some economists fear will drag the US into a recession.

“There is a very long way to go before the Fed feels that it has enough convincing evidence that inflation is moderating to stop raising rates,” Guha added.

The Fed and investors will look at how inflation affects spending next week.

View from consumers

According to FactSet, the pre-Wednesday report from the Commerce Department is expected to show a modest leading gain of 0.2% in July after a 1% gain in June, according to FactSet. The report is not adjusted for inflation.

However, there are many opinions on where the numbers could land.

Citigroup said its credit card data showed a likely 1.1% fall for the month, while Bank of America said it was down 0.2%, despite control group spending – excluding a range volatile portfolios – could have gained 0.9%.

Fed officials will be watching closely to see larger trends in how inflation is affecting Main Street.

“It looks like an expected peak in inflation has come in,” said Joseph Brusuelas, chief economist at RSM.

However, he said this week’s numbers are likely not to shake the Fed’s intention to keep inflation down to the central bank’s 2% target.

“I think July inflation does not change the Fed’s policy path and any view that the Fed pivot is within reach should be dismissed,” he said. “We are several months away from having clear and potentially convincing evidence that inflation is on track to return to the 2% target, which has now defined price stability.”

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