US inflation report: “another brick in the wall”

Inflation is becoming more and more cemented into the system. Once again inflation surprised to the upside. Headline CPI was up 0.4% MoM (8.2% YoY), while core CPI hit a 40 years high.

The latest inflation print confirmed the trend we have seen over the last few months: inflation is not going away, it is simply moving from goods to services, which unfortunately are more sticky in nature.

Going forward much will depend on what is going to happen with wages, the major input cost to services. A deceleration in wage growth will likely result in inflation slowly returning to a more “normal“ level, while a reacceleration could leave us in a very bad place for next year.

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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