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US Inflation Report Benign Again, With Shelter The Only Blight
US inflation was benign again in July, crucial figures released on Wednesday showed.
Core price growth across the world's largest economy was 0.165% on an unrounded basis last month, the BLS said. Consensus expected 0.2%.
From the same month a year ago, the core gauge rose 3.17%, marking a new "since April of 2021" low.
The headline gauge rose 0.155% unrounded and 2.9% YoY, with the latter slightly below estimates.
Nothing in the release stood out as especially remarkable. Food at home pri
Two comments on this front. We still have to remember that 2% price growth compared to last year doesn’t mean anything actually went down. Prices are just getting bigger at a slower rate. Even at 2% inflation, every five years prices will be up nearly 11% compared to five years earlier and so forth. As H pointed out, inflation is cumulative. The two percent goal is meant mostly to reduce the cost to borrowers looking to pay back debts more cheaply.
The other comment is that some very important aspects of our life are ticking time bombs. Experts are forecasting that the demand for electricity is expected to rise 50% during this current decade. If that happens, and it seems likely that it will between rising EV production and a rapid rise in data center construction, the cost of electricity will begin to rise quickly. While those of us lucky to make a good living won’t notice this, those in the bottom 50%, the ones who are the base of consumer demand, are going to be hurt badly. Rising property taxes and rising electricity could easily whack those consumers with several hundred dollars a month on top of shelter, and fuel (you know, the bogey we don’t like to count). I see little downward movement in prices and the elephants who want to enter the room are now at the door. I try to look at things others may miss but I know Powell sees more data than I do. As my friends and I used to say, “he knows.”