Inflationary trends in the spotlight: U.S. awaits crucial CPI data this week

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Quick Take

Thursday’s upcoming US CPI data is expected to confirm inflationary pressures persisting well beyond the 2% target, indicating an economy where prices are rising faster than anticipated. Analysts estimate core inflation — which excludes the more volatile components of food and energy — at 4.8%. Interestingly, the year-over-year inflation rate is projected to rise to 3.3%, a noticeable increase from June’s 3%.

Meanwhile, commodities like oil have begun to surge, now exceeding $80 per barrel, potentially stoking further inflationary momentum. A historical examination suggests a parallel with the inflationary waves of the 1970s. Should this pattern repeat, inflation could potentially spike to around 10% in subsequent waves. However, unlike the 1970s stagflation scenario, today’s economy boasts a significantly lower unemployment rate, registering a 40-year low of 3.5%, indicating robust employment despite rising prices.

US inflation: (Source: FRED)

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