US Inflation data

Another encouraging inflation report from the US showing further easing in inflationary pressures. Goods inflation continues to trend lower, while core services ex-rent, which is heavily impacted by wages, is cooling off. Shelter inflation remains strong, but will likely start to soften in coming months reflecting the weakness seen in rents for new leases.

Going forward, inflation will probably continue to trend lower, however the question really remains around where it will settle. De-globalisation will likely maintain core goods above where they have been pre-COVID, while the tight labour market will keep pressure on wages and as a result on core services. Coming off the inflation peak is the easy part, going back to the 2% target will prove much harder.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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