US Inflation Watch – Highlights
June and July’s cooling was a mirage, with the softness driven almost entirely by World Cup prices unwinding rather than any easing in underlying inflation. That one-off help is now spent, so the next inflation print will be harder to bring down.
Pipeline costs continue building, with the prices businesses pay for imported goods rising every single month this year and Chinese imports at their most expensive since 2022. July’s softer PPI reading was a sharp reversal in energy, not a broad easing.
The CRY commodity index has hit an all-time high of 396.78, and the rises are concentrated in the everyday essentials households feel most – food, fuel and heating, just as winter arrives.
Supply and demand for workers is still roughly balanced at 1.04 vacancies per unemployed worker, but private-sector hiring has stalled and pay growth is slowing. Slower wages help pull inflation down – but they also squeeze incomes and, with them, spending.
Wheat, corn and fertiliser prices have all surged. Whilst food inflation is still soft, higher input costs will begin to feed through to the shelves, making grocery inflation a clear upside risk.
Fed Funds Futures now price in over a 50% chance of a hike in September, with 50bps of hikes priced in by March 2027 following a PCE beat and Warsh’s hawkish tone at Jackson Hole.
Inside our September 26 Inflation Watch Report you will find more than 20 charts comprising key inflation indicators grouped into different categories, including consumer and producer price inflation, commodity prices, wage inflation, inflation expectations and monetary indicators.