(Finance) – Despite US inflation on an annual basis has risen to highest since December 1981, Wall Street reacted positively to consumer price data released today by the Bureau of Labor Statistics (BLS). Excluding food and energy components, ie the most volatile ones, the “core” indicator increased by 0.3% on a monthly basis and by 6.5% compared to a year ago, partly due to the larger drop in prices of vehicles used since 1969. In light of this data, the March inflation reading represents what many economists expect it to be the peak of the current inflationary periodalso partially impacted by the Russian invasion of Ukraine.
“There have been some positive points In the data, which suggests March could potentially be the peak for inflation, ” said Lindsey Bell, Ally’s chief markets and money strategist.“When you juxtapose this with the recent drop in oil prices, the improvement in shipping costs, a potential reduction in demand due to higher prices and the cycle of comparisons with higher inflation: it is inflation may be peaking“.
“There isn’t much positive in today’s inflation data – commented Matt Peron, Director of Research at Janus Henderson – The best that can be said is that core inflation was lower than expected, at “only” 6.5%. This could give some relief to the markets that were preparing for the worst. The key now is whether inflation has peaked and, if so, at what rate it will fall. “” This reading is likely it will prevent more aggressive action by the Fed in the short termbut there is some reason to believe that the core component of inflation will fall sufficiently by the end of the year, causing the Fed’s tighter action not to occur at all. our “mid-cycle slowdown” scenariowhich remains our base scenario, albeit with a narrow margin “.
“The relief came from core priceswhich exclude volatile food and energy prices, which recorded the slowest pace of rise since September – Ben Laidler, eToro’s global markets strategist pointed out – This is thanks to the prices of used cars, which seem to have reached a peak, having reported a slowdown for the second consecutive month “.” The financial markets, already stressed, will be able to gain a some relief – he continued – Inflation, although uncomfortably high, it is in fact showing some signs of approaching its peak. This could ease both the Fed’s already “hawkish” predictions to raise interest rates by 2.5% this year, and the recent dramatic spike in US bond yields, as well as having an effect on the value of the dollar. ”