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Fri Aug 27, 2021, 11:57 PM

Business Insider: Inflation is cooling off just as economists, the Fed, and Biden expected [View all]


The slowdown from June's inflation print suggests the demand boom seen through reopening could be petering out. Inflation soared to decade-highs through the spring and summer as vaccination helped the US reverse lockdowns. Economic activity rebounded, but where demand quickly shot higher, producers struggled to keep up. Bottlenecks and shortages left suppliers on the back foot, and the resulting gap between businesses' supply and Americans' demand drove prices higher.

Where inflation accelerated the most hints at a future slowdown. Sectors associated with reopening and the direst supply shortages saw prices leap the fastest. Used car prices leaped at least 7.3% for three months in a row before rising just 0.2% in July, according to the CPI report. Airline tickets, fuel, and service businesses also counted for much of the overshoot.

Since the categories are so closely linked to reopening, it's likely inflation will cool off as supply chains heal and demand wanes, Fed Chair Jerome Powell said in a July 28 press conference.

"Essentially all of the overshoot can be tied to a handful of categories. It isn't the kind of inflation that's spread broadly across the economy," he said. "And each of those has a story attached to it that is really about the reopening of the economy."



I never did agree that Biden's program or government spending were to blame for the recent higher inflation. Supply shortages and pent-up demand had much more to do with it.

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Reply Business Insider: Inflation is cooling off just as economists, the Fed, and Biden expected [View all]
DemocraticPatriot Aug 2021 OP
left-of-center2012 Aug 2021 #1
monkeyman1 Aug 2021 #2
cinematicdiversions Aug 2021 #3
uponit7771 Aug 2021 #4