Thought Of The Week

U.S Consumer Price Index (CPI), Retail Sales Data

The August U.S Consumer Price Index (CPI) showed a surprising cooling of price pressures and inflation was lower than expected. CPI rose 0.3% from July which was slightly below economists’ forecast of 0.4%, indicating that the pace may be abating. Some of the categories that saw a spike due to the economy restart (used car prices and airfares) have started to slow. Economists have long argued that consumer prices reflect temporary surges in demand and companies are simply counteracting with price increases. The inflation data confirmed that these demand surges do not last although it is still difficult to anticipate month-on-month swings given the unique nature of the restart dynamics. Ultimately, the volatility in prices should subside as supply-demand mismatches ease. Despite the Delta surge and headlines about inflation, U.S consumers remain well and alive as they increase spending...