The stuff that goes into making products , oil, copper, wheat , etc. have come down….
The high cost of consumer goods and services are supposted to be attached to these things….
Some of us don’t believe the outfits selling stuff are not gonna drop their prices cutting back their profits….
Global inflation is finally coming off the boil, even if it’s set to remain far too hot for the liking of the world’s central bankers.
As economic growth slows, prices for key raw materials — from oil to copper and wheat — have cooled in recent weeks, taking pressure off the cost of manufactured goods and food. And it’s getting cheaper to move those things around, as supply chains slowly recover from the pandemic.
After the worst price shock in decades, the speed at which relief arrives will vary, with Europe in particular still struggling. But for the world as a whole, analysts at JPMorgan Chase & Co. estimate that consumer-price inflation will fall to 5.1% in the second half of this year — roughly half of what it was in the six months through June….
Inflation in the euro area is forecast to accelerate beyond July’s record 8.9% and Citigroup Inc. predicts that it could exceed 18% in the UK, in part because a cap on energy bills just got lifted. All kinds of once-unlikely proposals, from nationalization to power rationing, have been floated to address the crisis.
The US, by contrast, will experience the fastest slide in inflation among developed economies, thanks in part to the strength of the dollar, the JPMorgan economists say.
That won’t stop the Fed from tightening into restrictive territory. Anna Wong, chief US economist at Bloomberg Economics, expects the Fed will eventually have to raise rates as high as 5% to rid the US of its inflation problem….
Rising wages could also keep inflation around for longer.
Labor costs are by far the biggest expense for many businesses, especially in service industries. With job markets in the US and Europe still tight, companies are being forced to boost pay. To maintain profits, firms would then need to pass along their higher wage bills to consumers.
“We are quite worried about a wage-price spiral,” says Robert Dent, senior US economist at Nomura Securities. “One may already be happening to a certain degree.”
There’s also the argument that inflation won’t return to pre-Covid levels because the world was already poised to change. Globalization is fraying — a process accelerated by the war in Ukraine — and measures to tackle climate change could add another layer of costs, at least in the short term.
In a report this month, economist Dario Perkins of TS Lombard predicted that such forces will combine to create what he calls a “new macro supercycle.”….
Prices remain highly elevated. Russia’s war on Ukraine could send oil prices soaring again. And Federal Reserve Chair Jerome Powell vowed Friday that the central bank will do whatever it takes to kill high inflation, triggering a stock market rout and fueling fears that the Fed could push too hard on raising interest rates and tip the economy into recession.
But for now, as one top Biden aide said, “the trend is our friend” and the trend looks a lot better than it did a few months back, with the government reporting that the Fed’s preferred measure of inflation decelerated in July.
“We saw a materially better inflation number on Friday, and lower gas prices mean we will probably see even more improvement in consumer sentiment,” said Jan Hatzius, chief economist at Goldman Sachs. “I’m cautiously optimistic on the path of inflation.”….