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Monday, August 2, 2021

US inflation expectations set by economists in June

By Olivia Rockeman and Sarina Yoo
From Bloomberg News

The inflation expectations of economists continue to rise as a variety of key statistics underline the pressure on the building price.

Forecasters have raised their estimates for the consumer price index and for a major inflation meter, known as the personal consumption spending price index, for the first half of next year, according to the latest monthly survey of economists by Bloomberg. .

Compared to a year earlier, the CPI is forecast to remain above 3 per cent until March 2022, with a peak of 4.3 per cent in the current quarter, according to the median forecast in a survey from 4 to 9 June below 77 economists. The data released on Thursday showed that the benchmark for a third consecutive month has risen more than expected.

The PCE price index is expected to rise by 3.5 percent in the period April to June, up from the estimate of 3 percent in the May survey and well above the Fed’s target of 2 percent. While rising fuel prices may in part help explain the improvement in inflation, measures excluding food and energy are also being adjusted higher.

Faced with an increase in demand, supply bottlenecks and rising input costs, many businesses have increased their prices to protect their profit margins. Whether the increases will lead to a more sustained inflationary trend has divided economists and market participants.

“The supply capacity must eventually catch up, but it may take time with the risk that we will see longer inflation readings longer than we have experienced at any point in the last twenty years,” said James Knightley, ING’s international economist.

Fed officials have repeatedly said they expect price pressure to be temporary. As a result, they have given no indication that they are ready to buy bonds or raise rates within the foreseeable future.

So far, economists surveyed by Bloomberg also seem to view prices in prices slightly temporarily. The expectations for annual profit in both CPI and PCE will stop by almost 2 percent in the second half of next year.

Growth expectation

Economists also raised their outlook for gross domestic product growth for the rest of this year, but the reasons for the upward revision differ from quarter to quarter. GDP is expected to grow by 10 per cent in the second quarter, driven by stronger consumption spending than originally forecast last month.

However, growth in the last half of the year reflects higher estimates for private investment growth. This category includes spending on capital goods by enterprises as well as residential investments. Forecasters increased their forecasts for private investment by a full percentage point to 8.6 percent in the period July to September.

© 2021 Bloomberg LP Distributed by Tribune Content Agency, LLC

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