USA Inflation 2022 – Is rising further?

In the year 2022, the USA reported higher inflation after 40 years of history. For every single month, inflation of the country was more than 7 percent when compared with the same period of the last year. According to the IMF forecasts, average USA inflation in 2022 will be 7.7 percent.

We will present monthly statistics for the USA Inflation 2022 as follows.

How is the USA Inflation for the August, 2022?

The average price level in August likely decreased, and the annual inflation rate decreased from 8.5% to 8.0%, according to the consumer price index report due out on September 13. 

This is most likely due to yet another significant drop in petrol costs and a decrease in the cost of secondhand cars.

 Gas prices have decreased to almost where they were prior to Russia’s invasion of Ukraine. 

The price of secondhand cars should have fallen the most since they reached their peak in January, when they had risen 54% as a result of the pandemic’s heightened demand.

How is the USA Inflation for the July, 2022?

After the Labor Department revealed that the consumer price index (CPI) remained mostly unchanged in July compared to June, hopes that inflation has started to reduce grew.

Rusty Vanneman, chief investment strategist at Orion Advisor Solutions, said: “This is a good number. If this really is the inflation peak, it may formally herald a change in the economic tide that both investors and consumers will welcome.

However, the good news doesn’t necessarily indicate that prices have dropped overnight. In July, the CPI increased 8.5% over the same month last year. Even though it’s down from last month, that level is still pretty high.

Is US inflation Expected to Rise further?

There is still inflation to go. The cost of necessities like food, rent, and new cars continued to grow sharply. After a year of substantial monthly increases, there is some sign that the price of food may be slowing. However, numerous businesses’ ongoing high pay rises are expected to keep the majority of pricing under upward pressure for some time to come. Expect price inflation to be approximately 8.0% at year’s ending, slightly lower than the peak of 9.1% in June but still strong. If the economy weakens as anticipated, inflation will likely decline to between 3% and 4% by the end of next year. Specially According to the IMF forecasts, inflation rate of the USA will be 2.9 for the financial year 2023.

The surprising June report that revealed a sharp increase in the CPI’s year-over-year growth to 9.1% after an 8.6% jump in May precedes the headline July CPI figures.

Perhaps the largest group of Americans who could have foreseen such a collapse was approaching were drivers. After increasing by 11.2% year over year in June, the gasoline index experienced a steep fall. Over the same time period, energy prices decreased 4.6% overall.

However, car owners shouldn’t get too cozy. Gas prices are still 45% higher than they were last year even if they decreased by 6.1% from the previous month in April of this year.

In contrast, the news on food, another necessity of existence, was less positive. Food prices increased in July and are currently 13.1% and 7.6% more than they were a year ago, respectively. The largest 12-month increase since May 1979, the overall food index increased by 10.9%.

How will USA inflation be – IMF forecasts?

According to the IMF forecasts, average USA inflation in 2022 will be 7.7 percent. We will present how IMF has forecasted the USA inflation up to the year 2025.

Could Inflation Help Spark a Recession?

Still USA economy is not in a recession.  But this higher inflation can drop USA economy in a recession. To see “What happened in a recession”, kindly click here.

The Fed must aggressively raise interest rates to reduce inflation without sparking a U.S. recession, which is a delicate balancing act.

Rising interest rates make borrowing more expensive for households and businesses, which drags down economic growth. The U.S. labor market has been strong up to this point, but Wall Street worries that the economy would not be able to handle rising interest rates are reflected in the S&P 500’s 13.5% year-to-date fall.

Because fund managers often use discounted cash flow models to calculate their price objectives for growth firms, growth equities are particularly sensitive to rising interest rates. Higher discounted rates are viewed as being less beneficial for future cash flows.

The Russell 1000 Growth Index has fallen by 19.2% so far in 2022, while the Russell 1000 Value Index has fallen by 7.3%.

However, not every industry of the stock market will suffer from inflation. Rising prices for commodities like oil, natural gas, and other raw materials have enabled the energy sector companies to post historic profits in 2022. Despite general market weakness, the Energy Select Sector SPDR Fund (XLE) has gained 37.8% so far this year.