Will U.S. consumer prices continue to rise rapidly?


Will U.S. consumer prices continue to rise rapidly?

The inflation rate in the United States is expected to remain high in June, which further indicates that labor shortages, rising commodity prices and the end of social restrictions are contributing to the rise in inflation.

A Bloomberg survey of economists shows that the US Bureau of Labor Statistics will announce June consumer prices on Tuesday, which are expected to rise 4.9% from the same period last year.

Inflation in May was higher than expected, and consumer prices rose by 5%, the largest annual increase in nearly 13 years. This leap has fueled investor speculation that the Fed will be forced to raise interest rates early.

According to a group of surveys closely followed by the Supply Management Association, corporate executives continue to report rapid price increases. Data show that the price paid by manufacturing companies has increased faster than at any time since 1979, and the price paid by service companies has increased at the level of 2008.

Ryan Detrick, chief market strategist at LPL Financial, said that the bargaining power of workers is due to the need to quickly recruit employees in the service industry, which gives job seekers the upper hand and “will become an important basis for the inflation debate” .

James Knightley, chief international economist at ING, added that if wage growth accelerates, it will “increase inflationary pressures and may lead to an earlier policy response by the Fed.” Matthew Rocco

Have investors underestimated British inflation?

British investors firmly believe that the inflation burst this summer will be temporary, which may be tested again this week with the release of June inflation data.

Wednesday’s Consumer Price Index will provide the latest glimpse into the ripple effect of the UK’s rapid economic rebound on prices, as the coronavirus lockdown is lift, And how accurately the market predicts these price increases.

There are signs that investors may have underestimated inflation. Reading in may The annual growth of 2.1% was higher than the 1.8% predicted by economists. A Reuters survey showed that economists expect an annual growth rate of 2.2% in June.

However, after rising inflation concerns initially pushed the 10-year Treasury bond yield from less than 0.2% at the end of last year to about 0.9% in May, investors have recently been ready to check the data.

Ahmer Tirmizi, senior investment strategist at Seven Investment Management, said that as the economy reopens, “there is so much for all of us.” “In other words, we believe that the burst of inflation will be temporary.”

Bank of England Say At the most recent policy meeting last month, although inflation “may exceed 3%”, it will then fall and should not affect monetary policy.

At present, investors seem to be ready to accept the central bank’s promise.

“Governor [Andrew] Bailey emphasized that they will only respond when inflation is more persistent than they expected. It is obviously too early to assess this,” said Sushil Wadhwani, chief investment officer of QMA Wadhwani and former member of the bank’s monetary policy committee. Lawrence Fletcher

Is China’s economic recovery losing momentum?

Investors and traders will pay close attention to China’s GDP data on Thursday to see if there are any signs that the country’s growth rate is slowing after a strong recovery from the economic impact of the pandemic.

Economists surveyed by Bloomberg predict that China’s economy will grow by 8% year-on-year in the second quarter after a growth of only 3.2% in the same period last year.

In the first quarter of 2021, China’s economy grew by 18.3% year-on-year. However, due to the impact of the epidemic, the low base at the beginning of 2020 has led to unusually high growth. On a quarterly basis, GDP grew by only 0.6%, far below expectations.

Due to a History shrinks In the economy at the beginning of last year, China has already begun a recovery driven by industry. By the end of 2020, its growth rate has surpassed pre-pandemic levels — far exceeding other major economies, which continue to struggle with high infection rates.

Economists predict that as China’s economy continues to recover, consumption will shift to increase. Data released also on Thursday is expected to show a 12% year-on-year increase in retail sales.

Larry Hu, chief China economist at Macquarie, said that China’s growth model in the first half of this year was “very different from the past decade, because it is more driven by exports than investment.”

He added that exports may have peaked and growth may continue to slow in the second half of the year due to tightening credit conditions. Another official data to be released on Tuesday will show a year-on-year growth in exports in June, and economists predict a 22% increase. Thomas Hale



Source link

admin

Leave a Reply

Your email address will not be published. Required fields are marked *