Markets heat up as US inflation cools

Danni Hewson
14 September 2021

Danni Hewson, AJ Bell financial analyst, comments on the latest US inflation figures.

“And just like that US futures went from red to green.  Mere moments after the latest inflation data dropped and investors let out a sigh of relief that this month at least, there would be no big surprises. Yes, the US economy is still running hot but not as hot as in previous months and there’s little in today’s figures that will require the FED to bring forward its tapering timetable.

“Digging into those price swings and there is a great deal in today’s data which suggests some recent price pressures were indeed transitory.  After five months of increases in used car prices August tipped the scales, seemingly demonstrating that the best cure for sky-high prices is indeed sky-high prices.  But then a lot of post-COVID demand has now been met and supply bottle necks and component shortages will continue to drag up inflation in some areas well into the autumn.  New cars are a prime example of that, with production cut due to those pesky semi-conductors limiting the number of vehicles available on forecourts.

“And though the trend is cooler, there do seem to be more sectors feeling the price pinch and when the upward pressure includes food, clothing and energy that’s going to make things uncomfortable for the average household budget.   Just looking at the day’s early risers on Wall Street’s S&P 500 and big oil and energy companies are right out in front.  Oil prices are at a six-week high and gas prices heading into the autumn months look problematic for the consumer.

“Tomorrow it’s the UK’s turn to be graded.  Today’s jobs figures highlight worker shortages which are piling the pressure on businesses already dealing with supply issues.  The headline number might cause a twinge and the robust jobs market might add to speculation that the UK could be within sight of a rate hike, but winter is fast approaching and no one wants to rock the boat if it has to weather another COVID storm.”

Danni Hewson
Financial Analyst

Danni spent more than 19 years at the BBC, presenting and reporting on business news across a variety of programmes – including BBC Breakfast, BBC News Channel, BBC Look North and latterly Radio 5 Live’s flagship business programme ‘Wake up to Money’. She is now responsible for producing analysis and commentary across a broad range of subjects at AJ Bell, from financial markets, to economics and personal finance.

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