US inflation for April came in worse than expected with April’s consumer price index (CPI inflation) rising 4.2% and core CPI gaining 3%, the highest since 2009. The US Federal Reserve (Fed) targets inflation of 2% and even though they focus on core CPI, the number overshot this target.
Now, there are two issues, the first being the base effect. April 2020 saw a hard lockdown and inflation plummeted. So, a high April 2021 number was expected. Secondly, stimulus cheques have in part been spent coupled with pent-up demand as the US vaccinates its citizens. This is best illustrated by the data point that used cars and trucks – it saw a 10% jump in prices year-on-year and contributed a third to the month-on-month increase in core inflation.
Now, we can debate the second point but to my mind there are bigger issues. I wrote recently about how I feel that high structural inflation such as we saw in the 1970s through to the 1990s is over and unlikely to be repeated.
Bu hikaye Finweek English dergisinin 11 June 2021 sayısından alınmıştır.
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Bu hikaye Finweek English dergisinin 11 June 2021 sayısından alınmıştır.
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