U.S. Inflation Update
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Due to the continued existence of inflationary pressures due to supply chain constraints and soaring demand, the increase in consumer prices in the United States in July stabilized at a 13-year high, while the month-on-month increase slowed slightly.
The Consumer Price Index (CPI) released by the US Bureau of Labor Statistics rose 5.4% year-on-year in July, exceeding the 5.3% expected by economists. This is in line with the 5.4% increase reported in June, which is the largest increase since 2008.
On a monthly basis, prices rose by 0.5%, while in June they rose by 0.9%.
Even if volatile commodities such as food and energy are excluded, price pressures have hardly alleviated. Compared with the same period last year, July’s “core” indicator increased by 4.3%, slightly lower than June’s 4.5%.
Whether the recent rise in consumer prices will evolve into longer-lasting inflation is the focus of debate between policymakers and economists.
The Federal Reserve generally believes that as the pandemic-related shortages and supply chain constraints ease, rising costs will weaken over time.But Fed Chairman Jay Powell (Jay Powell) recently admit Inflation risks are “upward” in the short term.
Recent data shows that inflationary pressures have begun to extend beyond the sectors most affected by the economic reopening-such as air tickets and other travel-related expenses-causing people to think that inflation will not be just a “temporary” phenomenon. Worry.
Wednesday’s report showed that price increases in industries more sensitive to pandemic disruption have slowed for the first time this year.
price Used cars and trucksA year-on-year increase of 41.7%, and only a 0.2% increase from June to July, a sharp slowdown from the 10.5% and 7.3% growth in the previous two months, respectively.
The U.S. Bureau of Labor Statistics stated that this decline is a “primary factor” for the more modest rise in the “core” inflation indicator.
Airfare prices also fell by 0.1% from the previous month and rose by 19% from the same period last year. The sharp rise in hotel expenses fell slightly. From June to July, hotel expenses rose by 6.8%, compared with 7.9% in the previous period. This brings year-on-year growth to 24.1%.
A worrying trend mentioned by economists is on the rise Housing cost, Which climbed further last month. Based on the similar increase in the previous two months, the owner’s equivalent rent, which measures housing rental purposes, rose by 0.3% month-on-month in July. This brought a year-on-year growth of 2.4%.
“I think there is still evidence that this [inflation] The pressure is still there,” said Thomas Simons, an economist at Jefferies. “We will not see a price drop, but at some point we will see a decline in the increase. .. It does help support the claim that inflation is not out of control. ”
More and more U.S. central bank governors have begun to argue that the Fed should consider reducing its unprecedented monetary policy stimulus measures as soon as possible, including the monthly purchase of US$120 billion in institutional mortgage-backed securities and Treasury assets.
The Fed has stated that it will maintain this rate until it sees “substantial further progress” in its goal of 2% average inflation and employment maximization.
Rafael Bostic, chairman of the Atlanta Fed and a voter on the Federal Open Market Committee, said this week that the Fed has achieved its first goal. Supported by K. Rosengren and James Brad. St. Louis and others.
Federal Reserve Governor Christopher Waller recently Handle a case The “reduction” was announced in September, and Vice Chairman Richard Clarida (Richard Clarida) supported action later this year.
Powell did not propose a specific timetable, but confirmed that a debate has taken place in progress On how the central bank will cancel its easing policy.
After the release of the CPI report, US government bonds reversed the previous decline and reduced the 10-year Treasury bond yield to 1.34%. The two-year U.S. Treasury bond fell sharply, with the yield falling 0.01 percentage point to 0.23%.
Additional report by Kate Duguid in New York