Gradual increase in US inflation

In the USA, headline CPI increased by 0.4% on a monthly basis and increased by 1.3% on an annual basis in August. (Tera Yatırım)

In the USA, headline CPI increased by 0.4% on a monthly basis and increased by 1.3% on an annual basis in August. On the core inflation side, where volatile items such as food and energy are excluded, there are 0.4% and 1.7% monthly and annual increases, respectively. Inflation exceeded market expectations in all categories. Used vehicles, gasoline, housing, entertainment and home furnishings appear to have contributed to the rise in inflation. As a projection of the Fed's average inflation targeting strategy, the speed and timing of the inflation increase will be important within the framework of this policy, which its details will be revealed next week.

 

When we look at the sub items; The sharp increase in used cars seems to be the most important driver of inflation. Besides; Items such as accommodation, household items, clothing, motor vehicle insurance, and airline fees also rose. While gasoline prices rose by 2%, it is seen that energy inflation increased by 0.9%. The food index, on the other hand, increased slightly by 0.1% in August after the fall in July. Items such as education and personal care fell in August.

 

Following the decrease in demand caused by the pandemic, the increase in CPI indicates that demand is recovering. In the process of reopening the economy, Americans stimulated demand, with the help of wage subsidies, but the impact of real income decline in fiscal package uncertainty will dampen the impact of this demand. The Fed, on the other hand, switched from a direct inflation targeting to an "average inflation targeting" strategy, as Powell said in his Jackson Hole speech, in the face of accelerating inflation, which indicates that finding 2% inflation will not initiate a tightening. Depending on the size of inflationary pressures, the Fed may allow inflation to go to levels of 2.5-3%. The Fed will announce its decisions on its first meeting after the Powell milestone on Wednesday, September 16th next week.

Kaynak Tera Yatırım
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