Former Fed official: service demand will still push up inflation but may ease early next year

Original title: Former Fed official: Service demand will still push up inflation, but it may ease early next year

Summary

[Former Federal Reserve official: service demand will still push up inflation but may ease early next year]Prudential fixed income (PGIM Fixed Income) chief economist and global macroeconomic research director Nathan Sheets said that the soaring commodity prices are driving After inflation, it is expected that future consumption recovery will continue to cause inflation to rise. However, as the shortage of supply this year and the bottleneck problem of global commodities will be alleviated, given the limited demand for services, prices will not rise indefinitely. (China Business News)

The surge in inflation has aroused global concern, and all walks of life are concerned aboutMidlandThe Chu “inflation is a temporary phenomenon” is also inconsistent.

On June 9, Beijing time, China will announce the May Consumer Price Index (CPI). More importantly, at 8:30 p.m. on the 10th, the United States will announce May CPI data. What will happen to the May data after April’s inflation data shocked the market? How long will this wave of inflation last?

Prudential fixed income (PGIM Fixed Income) chief economist and head of global macroeconomic research, Nathan Sheets, told CBN that after the soaring commodity prices drive inflation, it is expected that future consumption recovery will continue to lead to rising inflation. . However, as the shortage of supply this year and the bottleneck problem of global commodities will be alleviated, given the limited demand for services, prices will not rise indefinitely.

Before joining Prudential, Hitz served as the Deputy Secretary of International Affairs of the U.S. Department of Treasury.He was also inMidlandFor 18 years, he served as the head of the Department of International Finance and an economist at the Federal Open Market Committee (FOMC).

Since the beginning of this year, the accelerated upward inflation of inflation has been a concern of the market. The U.S. CPI data exploded in April. The overall CPI surged 4.2% year-on-year, the growth rate hit a new high since September 2008, and the core CPI surged 3% year-on-year, the largest increase since January 1996.

Among them, air tickets and hotel prices have shown an upward trend, reflecting the rebound in demand and the return of price patterns to the state before the epidemic. Other growth reflects that the bottleneck is deepening. The most obvious example is that the shortage of chip supply limits the production of new cars, thereby pushing up the demand for second-hand cars, leading to soaring prices of second-hand cars. In this context, the U.S. 10-year breakeven inflation rate subsequently rose to a new cyclical high.

Hitts believes that this situation is not unique to the United States. As prices in the bulk commodity market rise, inflationary pressures are spreading globally.

The rapid recovery of the global economy has caught some commodity producers by surprise. From a broader perspective, rising commodity demand has caused supply chain bottlenecks, so producers are also trying to catch up. Hitts said that survey data continued to show an increase in order backlogs and slower deliveries, indicating that the bottleneck of the supply chain has started to intensify in recent months.

In his view, in Asia, an important commodity production area, the above-mentioned changes have translated into a large-scale sharp increase in commodity prices. Even so, the transmission of rising production prices to CPI is still at an early stage, and only South Korea and other countries have seen a more global increase in consumer prices.

Hitts believes that the evolution of global inflation during the epidemic was mainly caused by changes in relative prices rather than overall price increases. These changes started with a sharp drop in global core service inflation last year. Before the epidemic, the average global core service inflation rate was maintained at 2.5%, and subsequently fell sharply due to lockdown measures. Changes in relative prices have also affected the global core commodities, and their inflation rate has risen from 1% before the epidemic to nearly 2% during the epidemic.

Hitts said that inflation will remain high in the short term. In the next stage, as the economy restarts and travel bans are relaxed, a rebound in service demand is likely to push the service industry’s inflation rate to the level before the epidemic. Recent CPI data in the United States and China have proved this. As in China, as the rebound in consumption lags behind industrial production, the rise in household consumption may be more pronounced, and this may lead to a further increase in inflation in the short term.

“However, we expect that this year’s supply shortage and the bottleneck of global commodities will be alleviated.” Heitz said that in view of the limited demand for services, prices will not rise indefinitely. Moreover, as before the epidemic, deeper structural factors are likely to come into play again to curb aggregate demand and control inflation. These factors include the aging of the global population, rising debt levels, and technological and innovative developments. Therefore, he expects that the pressure of rising prices will gradually ease later this year and early next year.

“In the coming months, certain factors may also cause inflation to last longer than expected. However, we expect that the current huge inflationary pressure will be largely eased. Over time, the economic environment is likely to return to the pre-epidemic period. State, not a new model of rising demand and inflation triggered by the epidemic,” he said.

(Source: China Business News)

(Editor in charge: DF537)