No Inflation Worry? Key Price Index Eases to Offer Relief to Markets

Source: WSJ

Future inflation signals have been easing in the past month, an indication that the recent surge in inflation could be temporary.

DXY is down -0.21%.

• Inflation expectations by businesses, consumers, workers, and investors, which rose sharply from October to May, eased in July.
• The break-even inflation rate dropped 0.19% since mid-May and shed 0.21 points over five years. 
• Business inflation expectation fell from 3% in June to 2.8% in July, which is still high compared to an average of 1.9% from 2012 to 2019.
• Fed has in the past insisted that the current price pressures are temporary as they are driven by slack in labor and unused business capacity.
• Some analysts are still pessimistic and see sustained inflation on Fed’s stimulus and supply chain disruptions.
• The cooling inflation signals come even as next year’s median price expectation from the University of Michigan survey rose to a high of 4.8% this month, the highest since August 2008.