US inflation rises with monthly spending, demand expected to remain weak

US inflation rises with monthly spending, demand expected to remain weak

Vakıf Katılım

While the headline CPI increased by 0.6% on a monthly and annual basis in June in the USA, core CPI increased by 0.2% on a monthly basis. Core inflation, which excludes food and energy, remains at annually 1.2%.

 

When we look at the sub-items; The increases in the gasoline and food side in June are noteworthy. After the recent declines, the energy item rose by 5.1% and gasoline prices by 12.3% in June. Food item also increased by 0.6% in this period. Prices for clothing, shelter and medical care items also increased in June; On the side of used cars, commercial vehicles, entertainment and communication, prices seem to have decreased on a monthly basis.

 

Increasing commercial activity with the normalization phase and openings in the economy seems to have affected the price pressure upward in June as expenditures increase. Nevertheless, the demand for goods and services remains weak, while to remain under pressure for the foreseeable period in terms of the core inflation trend will continue. We will continue to see the pandemic reflections on the inflation trend and expectations. Naturally, the inflation outlook does not reveal any evidence that will turn the Fed out of the way at this stage. Especially within the framework of the deteriorating employment market, we will have to watch the reflections of the rising unemployment and Trump's ending of unemployment benefits. Because the decrease in income negatively affects people's ability to demand goods and services, it will keep the demand component in the economy under pressure. This means that expenditures will remain below the pre-pandemic period. If inflation pressure is to occur, this will be mainly due to temporary price pressures, but it seems early to speak of a natural increase.

Source: Tera Menkul
Hibya News Agency