Is the U.S. inflation scare over?
The government on Tuesday said the cost of living rose 0.3% in August to mark the smallest gain in seven months.
The decline in used-car prices was expected after a record surge in the spring. Soaring prices earlier this year contributed heavily to the uptick in inflation. Used-vehicle prices are also likely to continue to decline. That will ease some upward pressure on the consumer price index, the government’s main tool for measuring inflation on Main Street.
Both of these declines likely reflect hesitation on the part of Americans to travel during August amid a flareup in Covid cases caused by the delta strain. Looking ahead, it’s reasonable to expect airfare and hotel rates to rebound as delta fades. Medical costs have also been surprisingly subdued as Americans avoided elective procedures. That will also change.Wages are climbing at the fastest pace in more than a decade. Companies desperate to hire more workers are raising wages because they can’t find enough qualified applicants. It’s reasonable to expect companies to try to pass those costs onto to customers.Finally delta has thrown another kink into the forecast.
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