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Services Inflation Makes A Comeback In Otherwise Benign CPI Report
The first CPI report of the post-Erika McEntarfer era at the BLS conformed to expectations.
The cor
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100% gut feel and I’m not an American, but have the feeling that most companies selling to consumers are waiting for each other to blink, i.e. to pass through the tariff inflation. No one wants to be first, because there will be hell to pay of course. Suspect it will happen around autumn, then they have had to eat the cost for 6 months and they’ll be done with it.
It will increase inflation sure. Does that mean Fed needs to keep rates high? Definitely not a Trump supporter, but I don’t see how lowering rates at that point will further fuel this inflation given where most of the consumers currently stand. The tariffs are a tax increase (similar to VAT) and those didn’t lead to follow-on inflation in previous instances.
Curious what will happen but to me the discussion around this seems to be mostly: inflation up so rates needs to go up as well. Would be keen to hear the other side. Lower funding for health insurance should bite the consumer too, right?
News from the industrial automation front:
“August 11, 2025 Import Surcharge Communication
Dear Customer,
At ifm, we deliver affordable automation solutions through a global manufacturing network strategically located for talent, lean practices, and supply chain access. As you may be aware, the U.S. government has confirmed additional tariffs on imported goods, with new rates effective as early as August 1st and August 7th. These changes significantly increase tariff rates on imports where our products are manufactured and sourced.
To offset the impact of these new tariffs, we will be adjusting our import surcharge from 8% to 12% on products not manufactured in the United States, effective for shipments on or after August 18, 2025. We will continue to provide details on country of origin, commodity code, and the itemized surcharge amount for each affected product.”
“waiting for each other to blink” – HA! not likely.
Tariffs are a consumption tax. Taxes make the buyer pay more. Cause and effect. Things imported and produced here will cost more. Maybe AI will lay off so many people that overall wages will not increase. Whatever happens, Trump will rage.