According to economist Edin Mujagic, the US is “over the worst” of high inflation. Inflation in the US fell to 4.9% last month, the lowest number in two years. “It seems very strong that you can safely conclude that the worst is over.”
podcasts | “The worst is over with high inflation”
‘But’, Mujagic specifies, ‘the worst is not synonymous with evil, it is still evil’. He points out that this number is also “very negative”. «The two per cent inflation target was initially light years away, but now it is less distant. We are on the right track to reach that two percent.’
Yet Mujagic sees details ‘under the hood’ that make him less happy. If we look at core inflation, it’s remained at 5.5% and hasn’t come down since the final months of last year. It remains stubbornly high,’ says the economist.
Tug of war
Mujagic also examines a key figure called “sticky inflation.” ‘These are products that slowly change in price. It’s still 6.5 percent and hasn’t dropped nearly, if at all, in recent quarters. Mujagic isn’t surprised that inflation isn’t coming down fast enough, despite sharp interest rate hikes from the Federal Reserve. “On the one hand, you see that it takes a while for an interest rate change to start having an effect on the economy.”
But the economist also points to a talking point he’s already mentioned: slow-motion inflation. ‘On the other hand, the shock from last year’s current high oil and gas prices is gradually starting to seep into every pore of the economy. So you get two opposite effects’, describes Mujagic. “So it’s kind of a tug of war.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
