10 June 2022
If you are covering the news that US inflation rose to 8.6% year-on-year, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Last month’s drop in inflation in the US was never going to be the start of it freefalling to more palatable levels, and today’s reading shows just how precarious the situation is with CPI rising 8.6% year-on-year, higher than expected and compared to last month. Inflation has had a profound impact to date and will continue to make life difficult for many over the coming months. In the US, gas prices on the forecourt are around the $5 a gallon mark, highlighting just how it is impacting everyday people and the dollar in their pocket.
“This is also likely to be a very protracted peak with inflation to remain high for some time to come. Energy prices have the potential to keep rising further as the Ukraine war drags on and once China switches back on following their Covid shutdowns. This is very much a global problem and not going anywhere anytime soon.
“The Federal Reserve is feeling the pressure and as such it appears nailed on to raise rates by 50bps next week. However, with fears of economic slowdown growing louder and global growth stagnating, it faces an awfully difficult task of ensuring the economy has a soft landing. The volatility that has been ever present since the start of the year is likely to become more entrenched over the coming months and until we see inflation under control and thus investors need to be patient when identifying potential opportunities.”
