The Economist August 14th 2021 pp55-56 |Finance & economics|Inflation in America|”Beatable prices” “The inflation scare becomes less menacing”
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The US Bureau of Labor Statistics data highlights what’s happening with consumer prices in America. Looking at % change on a year earlier, overall prices rose about 5% but underlying that is nearly a 45% increase in prices for used cars and trucks. Looking more closely at % change in used vehicle prices on a month-over-month basis, previous month increases were more than 9% but have now retreated to nearly zero. Industry experts note that used car availability is still relatively low and that demand could rise again in Autumn.
“The overall consumer-price index rose by 0.5% month-on-month in July down from 0.9% in June.” In aggregate “in annualized terms” inflation “was still well above the Federal Reserve 2% target.” The Federal Reserve plan though appears to be on track with dialog now starting to mention a “wind down [of] its ultra-loose monetary policy this year (by reducing its monthly bond purchases), most Fed officials think it will start raising interest rates in 2023…”
Still some recurring expenses may be increasing as “rents paid by tenants and 'imputed' rents for home-owners rose by 0.4% in July from June” and could rise more with return to school and work etc. Tight labor markets, principally in leisure and hospitality, may lead to higher prices especially in restaurants as businesses raise wages to fill job openings.
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