Score a victory for team transitory in the inflation wars. The Consumer Price Index eased in August, reaffirming our view that inflation most likely formed a peak in the summer following the historic supply shock that defined pandemic economics starting last year. Top-line inflation eased to 5.3% on a year-ago basis, while increasing by a much more ... READ MORE >
inflation
Interest rate update: Inflation expectations remain subdued
In the modern era of monetary policy and moderate growth, global authorities have shown twice in the past decade their ability to counter horrific shocks to the financial sector and economic activity. Therefore, inflation expectations remain remarkably well anchored despite the recent five-month surge in topline inflation. Investors understand and believe ... READ MORE >
July Consumer Price Index: Inflation moderates and likely posts cyclical peak at 5.4%
The five-month surge in inflation has most likely resulted in a cyclical peak, reaching 5.4% in July on the back of a 0.5% increase on the month. The core Consumer Price Index excluding the more volatile food and energy components increased by 0.3% on the month and by 4.3% on a year-ago basis, according to government data released Wednesday. Like ... READ MORE >
Inflation and small firms: The restaurant squeeze is on
The recent surge in inflation is now a significant issue for smaller firms, and nowhere is this more evident than in the restaurant industry. While large firms can hedge volatility and medium-size firms can increase efficiencies to mitigate price increases, smaller firms don’t have as many resources yet still must contend with higher prices for both ... READ MORE >
Four ways retailers and restaurants can manage current inflation and labor pressures
As the economic recovery from the pandemic-induced recession continues, consumer demand is high and the opportunity exists for a strong holiday retail and restaurant season. But these sectors are facing two significant headwinds: inflation and challenges finding qualified labor. During the recession, there were many signals that demand would be strong ... READ MORE >
Consumer Price Index surges 5.4% in June as the economy reopens
The recent surge in domestic prices continued as consumer prices increased by 0.9% on a monthly basis and by 5.4% on a year-ago basis, according to Labor Department data released on Tuesday. While the increase in prices requires close monitoring by policymakers, the gains continue to be driven by a cluster of items -- energy, transportation (used car ... READ MORE >
CHART OF THE DAY: Inflation expectations remain rational and muted
A look at one of our preferred measurements of inflation expectations implies that the risk of a sustained outbreak of inflation is receding just as another set of inflation data—the Consumer Price Index for June—is set to publish on Tuesday. Inflation expectations play an important role in spending and investment decisions, in addition to determining ... READ MORE >
CHART OF THE DAY: Yield spread flattens as inflation trade unwinds
The Federal Open Market Committee unleashed a sharp change in market expectations following its Wednesday meeting, helping to curtail inflation fears. The idea of the first rate hike being pulled forward into 2023 with a possibility of 2022 elicited a change in the inflation trade and a resetting of market expectations of inflation. While the initial ... READ MORE >
May CPI: Prices surge on strong base effects and economic reopening
Prices continue to rise as demand outstrips supply across a robust economic reopening in the United States. Supply chain constraints and bottlenecks are still disrupting the flow of inputs used at earlier stages of production and intermediate goods. These disruptions underscore the imbalance between supply and demand that, in addition to comparisons ... READ MORE >
CHART OF THE DAY: What caused the increase in consumer prices in April?
The debate of the moment in financial markets and regarding the direction of monetary policy centers around inflation: Is it a risk to the economy? The data and our forecast imply that while prices are rising in a cluster of industrial ecosystems that make up roughly 20% of the economy, we do not expect a sustained increase in overall prices. We agree ... READ MORE >