In CPI Report, Economists & Experts Find Evidence That Inflation Has Peaked

NEW POLLING58% of Voters — Including 56% of Independents — Believe that Price Increases are Temporary Due to Pandemic Shortages

Moody’s Chief Economist Mark Zandi: The Bipartisan Plan And The Build Back Better Agenda Together Will “Lift The Economy’s Longer-term Growth Potential And Ease Inflation Pressures”

Yesterday, the Labor Department released data showing that core inflation rose by only 0.3%, well below inflation during the previous two months and lower than an expected rise of 0.4%.

The data is part of a downward trend in month-over-month increases, showing that inflation may have peaked and supporting economists’ belief that such inflation is transitory.

Here’s what people are saying:

Reuters: U.S. Consumer Price Increases Slow In July, Signs Inflation Peaked

U.S. consumer prices increases slowed in July even as they remained at a 13-year high on an annual basis and there were tentative signs inflation has peaked as supply-chain disruptions caused by the pandemic work their way through the economy.

The data could provide some support to Fed officials who have repeatedly said that the current burst in inflation is temporary and likely to fade as the handful of categories that have caused inflation to surge in recent months get back on an even keel.

CNN: US stocks climb as inflation report soothes anxious investors

Inflation data released Wednesday morning showed price increases moderated in July, leading some analysts to suggest we may have reached the peak of pandemic-era inflation. For nervous investors with an eye on Federal Reserve policy, the breather in price hikes is a welcomed development as it could take pressure off the central bank to rein in its policies sooner than hoped.

Reuters: Investors renew focus on Fed following signs inflation may have peaked 

In a research note, Morgan Stanley economists said Wednesday’s CPI data “supports the view that the last few months likely marked the peak rates of inflation.”

Reuters: MARKETMIND Peak inflation? 

Closely-anticipated U.S. inflation figures are easing concerns about runaway price growth and helping U.S. and global stocks notch up yet more record highs. Wednesday’s 0.5% reading for the consumer price index in July was the largest drop in month-to-month inflation in 15 months and has some investors starting to bet long-feared inflation on the back of pandemic-era stimulus may be peaking. U.S. Treasury yields fell, erasing some of this month’s surge.

Wall Street Journal: Stocks Rise on Infrastructure Prospects, Inflation Data

Also helping stocks was new data showing the U.S. may have already hit peak inflation. The U.S. consumer-price index gained 5.4% in July from a year earlier, coming in just above analysts’ forecasts of a 5.3% increase. More important, the core rate of inflation, CPI, rose by 0.3%—below the 0.4% increase expected—after excluding energy and food prices.

Axios: Consumer prices rise in July, but rate of inflation slows

The big picture: While inflation is still high by historical standards, Wednesday’s figures show that it may have peaked, at least for the time being. Another inflation measure, the core personal consumption expenditures index (PCE), also retreated from a peak monthly growth level in its most recent reading on July 30.

Here are quotes from economists:

Moody’s Chief Economist Mark Zandi: “I think the last of the effects of the reopening will be in this month. I think it’s going to be a peak in the year over year, if not July, then it was June. We’re there. We’re peaking.”

Oxford Economics Economist Kathy Bostjancic“We believe June marked the peak in the annual rate of inflation. That said, price increases stemming from the reopening of the economy and ongoing supply chain bottlenecks will keep the rate of inflation elevated.”

Oxford Economics Economist Mahir RasheedWe expect the July report to mark the peak of producer price inflation as supply pressures gradually unwind in the coming months and demand moderates from its blistering pace in the first half of the year. However, stubborn pandemic disruptions will continue to hamper supply through year-end, keeping producer prices sticky.”