United States: inflation slows, but oil prices worry the White House

Joe Biden welcomed the moderation of inflation recorded in July on Wednesday, but with pump prices still climbing, the White House warned US oil producers and distributors.

Read also: Why the price of oil is on the rise

"The price paid by oil companies for a barrel of oil has recently started to drop, but for many Americans, the cost of gasoline at the pump has not fallen,"

lamented the US president.

"I will make sure that nothing is against the drop in oil prices, which will lower prices for consumers,"

he added, in a speech from the White House.

In July, the prices of oil, so precious in the United States where consumers are used to paying very little to fill the tank of their imposing pick-ups, jumped by 41.2% compared to July 2020, and by 2.3% compared to June.

The White House therefore called on Wednesday the president of the American competition authority (FTC) to

"use all the tools available to (...) fight against any illegal conduct that could contribute to the increase in prices at the pump while the costs of a barrel of oil are falling, ”

the president announced.

Inflation stable over one year

Another responsibility pointed out by Washington, that of the Organization of the Petroleum Exporting Countries and its allies (Opep +).

"We (them) also made it clear (...) that the production cuts made during the pandemic should end as the world economy recovers, so that prices fall for consumers,"

said Joe Biden. .

"The rise in gasoline costs, if left unchecked, could harm the ongoing global recovery

,

"

US National Security Advisor Jake Sullivan earlier denounced.

Gasoline prices again pulled inflation in July, which however slowed compared to June (+ 0.5% against + 0.9%), according to the CPI index released Wednesday by the Labor Department. These data offer a breathing space, after four months of strong increases, which raised fears of an inflationary spiral similar to that of the 1970s and 1980s.

"

Core

inflation is starting to show signs of moderation,"

notes Diane Swonk, economist for Grant Thornton, in a note. But she also sees

"the emergence of the Delta variant, which could curb inflation in August"

and

"disrupts both supply and demand".

Compared with July 2020, inflation stabilizes, but remains high, at 5.4%.

The unfavorable effect of comparison with prices in free fall in spring 2020, under the effect of containment measures, is indeed reduced, since last summer, prices had started to rise again.

Second-hand cars

Another category whose prices jumped over a year, used cars (+ 41.7%). But the peak now seems to have been reached since, over one month, they recorded a modest increase (+ 0.2%), after having experienced a record increase in June (+ 10.5%). Demand was strong, as individuals took advantage of the crisis to move away from city centers, when car rental companies had to rebuild their fleets. In addition, the production of new vehicles is severely hampered by the semiconductor shortage, which has further boosted the demand for used cars.

Inflation should remain at a level

"high and stable, because the imbalances between supply and demand will be resolved only gradually"

, anticipate Kathy Bostjancic and Gregory Daco, economists for Oxford Economics.

Bottlenecks disrupting the global supply chain should indeed take many months to resolve.

Added to this are the difficulties that employers encounter in recruiting, especially for the lowest salaries, pushing them to increase salaries to attract candidates.

And the colossal infrastructure renovation project, led by Joe Biden and which passed the first stage of its adoption in Congress on Tuesday, is fueling fears of sustainable price increases, a risk that the Biden administration disputes.

Read also: Joe Biden's infrastructure plan crosses a hurdle in his obstacle course

For the first time in months, the PCE index, another measure of inflation, remained stable in June compared to May, at 4% yoy and 0.5% yoy.