Three signs of US inflation
There are clear signs that inflation is back and has already become entrenched in markets, with cost inflation pulling down profits in the US, according to Lonsec Research.
One of these signs was the fact that the biggest firms began to report higher input costs and the largest consumer manufacturers were faced with either lower revenue or higher cost of sales, which put some additional pressure on margins.
Lonsec also said that manufacturers were forced to pay more for raw materials, with the prices paid growing at the fastest rate since 2011.
Following this, input prices were rising along with commodity prices, including oil and metals, while US importers expected to feel the impacts of Trump’s escalating tariff war.
On top of that, core inflation measures were at or near the Federal Reserve’s target. That meant while the Fed kept rates on hold in May, both headline and core measures of inflation started to grow.
Lonsec stressed that, in particular, the CORE PCE Index, which was the Fed’s preferred inflation measure, was set to rise above two per cent, giving the Fed further impetus to hike rates through 2018.
AUTHOR
Oksana Patron
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