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July 2021’s Consumer Prices Were Up 5.4% Y/Y
The most widely watched US inflation rate released on Wednesday refused to budge from a 13-year high last month .With demand rebounding supply bottlenecks continuing, and the country’s government pumping trillions of dollars into the American economy. The “core” US inflation measure – which excludes unstable food and energy costs – eased slightly to 4.3% last month, compared to 4.5% in June. Price rises also relaxed on a sequential basis: goods and services were 0.5% more expensive in July than a month before, down from June’s chunky 0.9% gain.
Taken together, the figures suggest that US inflation may have peaked – potentially vindicating the Federal Reserve’s view that recent upticks are only temporary and that pandemic-related shortages will eventually evaporate. That could leave America’s central bank in little hurry to increase interest rates or start scaling back its $120 billion-a-month bond-buying program. Since the latter would remove a major source of demand for US government bonds, relieved investors bought more of them on Wednesday – pushing their yields, which move inversely to prices, lower.
Government support has played a major role in recent price rises, and there may be much more to come: the US Senate passed a $3.5 trillion budget blueprint on Wednesday, just a day after approving a roughly $1 trillion infrastructure spending package. That brings both plans one step closer to reality – along with their injection of near-unprecedented levels of government funding into the American economy. Taken together, the figures suggest that US inflation may have peaked – potentially vindicating the Federal Reserve’s view that recent upticks are only temporary and that pandemic-related shortages will eventually evaporate. That could leave America’s central bank in little hurry to increase interest rates or start scaling back its $120 billion-a-month bond-buying program. Since the latter would remove a major source of demand for US government bonds, relieved investors bought more of them on Wednesday – pushing their yields, which move inversely to prices, lower.
The Producer Price Index (PPI) rose 1.0% in July, Producer prices are up 7.8% versus a year ago. One explanation for the difference between increases in the CPI and the PPI is that suppliers are not passing on to consumers some of their cost increases.
Whether inflation has peaked remains hotly debated. The Government continues its major role in recent price rises, and there may be more to come: the US Senate passed a $3.5 trillion budget blueprint, just a day after approving a roughly $1 trillion infrastructure spending package.
The most widely watched US inflation rate released on Wednesday refused to budge from a 13-year high last month .With demand rebounding supply bottlenecks continuing, and the country’s government pumping trillions of dollars into the American economy. The “core” US inflation measure – which excludes unstable food and energy costs – eased slightly to 4.3% last month, compared to 4.5% in June. Price rises also relaxed on a sequential basis: goods and services were 0.5% more expensive in July than a month before, down from June’s chunky 0.9% gain.
Taken together, the figures suggest that US inflation may have peaked – potentially vindicating the Federal Reserve’s view that recent upticks are only temporary and that pandemic-related shortages will eventually evaporate. That could leave America’s central bank in little hurry to increase interest rates or start scaling back its $120 billion-a-month bond-buying program. Since the latter would remove a major source of demand for US government bonds, relieved investors bought more of them on Wednesday – pushing their yields, which move inversely to prices, lower.
Government support has played a major role in recent price rises, and there may be much more to come: the US Senate passed a $3.5 trillion budget blueprint on Wednesday, just a day after approving a roughly $1 trillion infrastructure spending package. That brings both plans one step closer to reality – along with their injection of near-unprecedented levels of government funding into the American economy. Taken together, the figures suggest that US inflation may have peaked – potentially vindicating the Federal Reserve’s view that recent upticks are only temporary and that pandemic-related shortages will eventually evaporate. That could leave America’s central bank in little hurry to increase interest rates or start scaling back its $120 billion-a-month bond-buying program. Since the latter would remove a major source of demand for US government bonds, relieved investors bought more of them on Wednesday – pushing their yields, which move inversely to prices, lower.
The Producer Price Index (PPI) rose 1.0% in July, Producer prices are up 7.8% versus a year ago. One explanation for the difference between increases in the CPI and the PPI is that suppliers are not passing on to consumers some of their cost increases.
Whether inflation has peaked remains hotly debated. The Government continues its major role in recent price rises, and there may be more to come: the US Senate passed a $3.5 trillion budget blueprint, just a day after approving a roughly $1 trillion infrastructure spending package.
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