Today’s highlight will be the latest consumer price index print from the US, which represents August price changes. Across the pond, inflation has been ramping higher throughout 2021 as several factors kick in. These include but are not limited to: supply chain issues, money printing, and demand-side pressures.
With respect to supply chains, shortages in car semi-conductors leading to reduced new car output has produced mammoth demand for 2nd hand cars. This saw a 50% rise in the cost of 2nd hand cars in the US over a 6 month period.
The Fed and US government have printed well over 10 trillion dollars since the pandemic started. This has filtered its way through the financial system and, in turn, has helped put upward pressure on prices.
Various stimulus programs have given consumers more disposable income which has created a short-term boost in demand. This has allowed producers and retailers to increase prices to reflect the pick-up in consumer demand.
Today’s release will be closely watched. Any print north of 5% should give participants something to think about and put pressure on the Fed around their notion of inflation being transitory.
Written by Viv Savani. 7:13am, September 14th 2021
The details expressed in this market report are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Cornhill International Payments limited accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the above information.