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This was an excellent week for inflation numbers, but whether it could last may be the big question

Gas station prices have emerged in Bethesda, Maryland on August 11, 2022.

Mandel Ngan | AFP | Getty Images

There is more very good news Friday for inflation, as import prices fell a lot more than expected and brought some much-needed relief for consumers.

The report capped off a comparatively upbeat week for all those concerned about rising prices and “relatively” may be the operative word because the U.S. is on pace this season to import just over $4 trillion of goods and services this season, based on the latest Bureau of Economic Analysis data.

With Americans already paying huge bills for food, energy and a bunch of other items within their daily lives, any respite is really a welcome one. In the end, the monthly import price drop of just one 1.4% was just the initial this season, and the year-over-year increase continues to be a lot more than 8.8%.

That news followed reports earlier in the week that both wholesale and retail price increases abated for the month. Producer prices declined 0.5%, and consumer prices including food and fuel were flat, both numbers owing largely to a sharp slide generally in most of the power complex.

Folks are noticing: A FRESH York Federal Reserve survey released Monday showed individuals are expecting inflation to remain high however, not by around previous months. On Friday, the University of Michigan consumer sentiment survey whose good and the bad have a tendency to ride in tandem with prices at the pump was greater than expected, though still just off record-low levels hit in June.

‘This is merely one report’

Taken together, the numbers are reason behind at least just a little optimism. But it’s probably smart to put exuberance on hold.

The buyer price index continues to be up 8.5% from the year ago, as the producer price index has surged 9.8% through the same period.

Krishna Guha, who heads global policy and central bank technique for Evercore ISI, cautioned in litigant note on CPI that, “as the report is in keeping with the idea that inflation pressures may finally have peaked, that is just one single report.”

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Similar comments came Friday from Richmond Federal Reserve President Thomas Barkin. The central bank official told CNBC that the inflation news was “very welcome,” but added he didn’t see any reason to pull back on the interest increases that some economists fear will drag the U.S. right into a recession.

“There exists a lengthy strategy to use prior to the Fed will feel it has sufficient compelling evidence that inflation is moderating to avoid raising rates,” Guha added.

The Fed and investors will receive a look in a few days at just how much of a direct effect inflation has made on spending.

View from the buyer

The Wednesday advance report from the Commerce Department is likely to show a modest 0.2% headline gain for July in retail sales following a 1% upsurge in June, in accordance with FactSet. The report isn’t adjusted for inflation.

However, there exists a wide variety of opinion on where in fact the numbers could land.

Citigroup said its charge card data show a potential 1.1% decline for the month, while Bank of America said it sees a 0.2% decrease, though control group spending excluding a number of volatile categories could have risen 0.9%.

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

“It can appear a tentative peak in inflation is set up,” said Joseph Brusuelas, chief economist at RSM.

However, he said this week’s numbers will probably do little to sway a Fed intent on stomping inflation right down to the central bank’s 2% target.

“I believe that the July inflation does nothing to improve the road of Fed policy, and any notion a Fed pivot reaches hand ought to be dismissed,” he said. “We have been some months from any potential clear and convincing evidence that inflation is well coming back again to the 2% target that currently defines price stability.”

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