Inflation
August headline CPI inflation will likely come in close to the consensus forecast at -0.1% – which would be the lowest single-month reading since the onset of the pandemic.
When we disaggregate the aggregate inflation statistics, we find that the sources of high inflation in the US and Europe are different.
July headline inflation is likely to come in roughly in line with the consensus forecast at 0.2% with the possibility of a mild downside surprise. Core inflation will likely be in line with forecasts as well at 0.5%, and is poised to cool further in coming months.
Two things are all but guaranteed for the rest of the week: 1. The Fed is going to hike 75 basis points (2.25%-2.50%) and signal that it remains vigilant about inflation. Their characterization of growth dynamics are likely to remain on the rosier side, and inflation expectations
As was warned in our May CPI preview (Peak Inflation? Not So Fast, My Friend. Upside Surprises Loom Large), the "peak inflation" calls were likely to prove premature. With the rapid rise of gasoline prices in the first half of June and passthrough from higher US benchmark natural
In this first piece of a series, we’re going to walk through an overview of the ways inflation statistics can diverge between countries and demonstrate just how difficult it is to establish apples-to-apples comparisons between aggregate inflation measures in different countries.
The White House should not use the refining capacity crunch as a reason to avoid grappling with the fragile state of crude oil supply, as it appears to be doing. In gasoline and other refined products, there are two related but separable sources of scarcity: crude oil and refining capacity.
Given the discretion afforded the Secretary in utilizing the ESF, and the strong correlation between commodity price volatility and exchange rate volatility, the Secretary has the authority to establish a Supply Insurance and Acceleration Program for key commodities.
The White House and Congress should consider an “all-of-the-above” approach oriented around three objectives: (1) investments where productive capacity; (2) targeted policies for reducing sectoral demand; and (3) policies that facilitate greater competition and technological diffusion.
