A suprise ? What a surprise ? In January, the rise in consumer prices accelerated in the United States. Inflation rose to 0.6% over one month and 7.5% over one year, a level not seen since February 1982 and higher than expected (7.3%). Acknowledging that he did not expect such a figure, Andrew Hunter, senior US economist at Capital Economics, underlines, in a note, that ” underlying inflationary pressures remain exceptionally strong ” even if ” earlier upward pressure from energy prices and goods shortages is fading. Staff shortages and sick leave, linked to the Omicron wave, have driven up airfares and clothing prices. The operation of many factories in Asia has been disrupted. Prescription drug prices have also risen unusually high. More worrying is the inflation of rents. She shows no signs of slowing down.
Tensions on the American 10-year
On the stock market, the equity markets took a hit at this announcement. In Paris, the Cac 40 index fell by 0.7%, to 7,082 points, around 3 p.m., while it was stable at midday. On the bond front, the yield on the 10-year US bond briefly passed the 2% mark for the first time since August 2019, while that of 2 years, the most sensitive to a rise in interest rates, climbed 10 basis points, to 1.45%. Persistent inflation only confirms the scenario of an American Federal Reserve (Fed) raising its key rates in March. The novelty is that the market is increasingly counting on a rise in the cost of money by half a point, and not more than a quarter of a point. According to the CME Group’s FedWatch tool, this probability is now assessed at 44.3%, compared to 25% this morning.
One question remains: can inflation go even higher? ” No “replies Andrew Hunter. And to explain: With gasoline futures continuing to rally alongside crude oil prices, energy prices will see a bigger rise this month, but it would take another significant rise to prevent the annual rate of inflation energy prices to fall this year. As a result, we doubt that headline inflation will rise much more than the 7.5% rate of January. Conversely, Kevin Cummins, chief economist at NatWest Markets, quoted by Reuters, believes that the factors that pushed inflation higher in 2021 should only gradually dissipate. ” They should continue to drive up inflation in the first half of 2022 “, he underlines. In particular, he expects inflation on consumer goods to affect wages and rents.
PC