Inflation spreads to more sectors of the US economy – WISH-TV | Indianapolis News | Indiana weather
(CNN) – The surge in price hikes in the United States moderated last month, signaling that inflation may have peaked. But investors should pay attention to another trend: the spread of higher prices to more sectors of the economy.
What’s Happening: Consumer price inflation remained high in July, according to the Bureau of Labor Statistics. Prices rose 5.4% from a year earlier, a stable level from June, when the index hit a 13-year high.
On a monthly basis, however, prices rose 0.5% in July, a significant slowdown from the 0.9% growth in June and the weakest pace since February.
But dig deeper into the data. While some of the main drivers of previous spikes, such as used car prices, eased over the past month, the cost of other goods, including medical care, housing, and food at grocery stores and restaurants , increased.
“The annual inflation rate has apparently peaked, but details show widening pricing pressures,” wrote James Knightley, chief international economist at ING, in a note to clients. “This indicates that inflation is likely to be more persistent and pervasive than the Federal Reserve predicted.”
For now, investors remain optimistic. The S&P 500 and Dow hit new all-time highs on Wednesday, and 10-year US Treasury yields fell as traders bet inflation data will allow the Fed to raise interest rates and to curb asset purchases earlier than expected.
Economy 101: The latest inflation reading doesn’t change the fact that “the stimulus-fueled US economy is booming,” according to Knightley. “Demand exceeds the supply capacity of the economy given the scars caused by the pandemic, as evidenced by production bottlenecks and labor shortages,” he said. .
Competition for workers is putting upward pressure on wages, while record levels of raw material supplies, backlogs and long delivery times add additional stress to supply chains.
“Costs are increasing throughout the economy, and the strength of demand means companies feel they have more price power. [than] they’ve known for years, ”added Knightley.
See here: Data from the National Federation of Independent Businesses shows that the proportion of companies raising their prices and planning to raise them further in the coming months is at its highest level in 40 years. “As such, impending major declines in inflation appear unlikely,” Knightley concluded.
Even the White House is worried about rising prices. US National Security Advisor Jake Sullivan on Wednesday called on OPEC + to increase oil production to cut high gasoline costs.
“President Biden has made it clear that he wants Americans to have access to affordable and reliable energy, including at the pump,” Sullivan said in a statement, adding that the US government “is engaging with concerned members. OPEC + on the importance of competitive markets in setting prices.
Next: With a growing number of senior Fed officials arguing for pulling out bond purchases, all eyes will be on the Economic Policy Symposium in Jackson Hole, Wyoming, later this month.
Airlines are not out of the woods yet
Air travel has resumed in the United States and Europe after the vaccine rolls out, but risks remain high for battered airlines desperately trying to recover from the pandemic.
The latest: Southwest Airlines warned on Wednesday that the Delta variant of Covid-19 will make it difficult to take profits in the third quarter. In a regulatory filing, the carrier said customers booked fewer flights in August and canceled trips they had already booked.
The development marks a brutal turn of events for Southwest, reports my CNN Business colleague Jordan Valinsky. The company predicted just a few weeks ago that it would be profitable in the third and fourth quarters based on strong leisure travel bookings.
But things can change quickly in the pandemic economy. In early July, domestic air travel, as measured by tickets issued by US travel agencies and online booking companies, was just 3% below 2019 levels. A few weeks later, on July 23, it was more than a fifth below the same point in 2019, according to CNN’s Business Recovery Dashboard.
Delta Blues: In the latest sign of how the Delta variant is weighing on the recovery, the International Energy Agency on Thursday lowered its outlook for oil demand for the remainder of the year, in part due to the “severity of the progression of the pandemic”.
After climbing in June to almost three times the seasonal normal thanks to increased mobility in North America and Europe, global oil demand “sharply reversed course” in July, the based organization said. in Paris in a report.
Art auction will test appetite for alternatives
Investors looking for more creative places to park their cash than the stock market will soon have the opportunity to deploy some serious dough.
Auction alert: Eleven works of art by Pablo Picasso with a combined maximum estimate of over $ 100 million will be auctioned in October, reports my CNN colleague Jacqui Palumbo.
Part of MGM Resorts’ significant art collection, the pieces have been on display in Las Vegas for more than two decades at a Michelin-starred French and Spanish restaurant called Picasso in the Bellagio.
Sotheby’s is hosting the sale, which is part of MGM’s attempts to reposition the gaming mecca as a “larger art destination,” according to Brooke Lampley, president of the auction house.
Investor Snapshot: Wealthy people who saved huge sums of money during the pandemic have hidden their money in unusual investments, such as high-end spirits and collectible cards. The Picasso auction will provide even more information on investor appetite for alternative assets.
Profits for TUI, Baidu, Palantir Technologies and Utz Brands are reported ahead of US markets opening. Airbnb, DoorDash, Disney and Wish report after closing.
Also today :
- Unemployment claims in the United States.
- United States Producer Price Index for July.