The pressure on the Biden administration ahead of the mid-term elections in the US is increasing: inflation in the US is not decreasing despite a series of interest rate hikes. The inflation data for the month of September increased at a sharper rate than expected - the consumer price index increased by 0.4% compared to the expected 0.2%, and on an annual basis the index increased by 8.2%.
Core inflation in the US rose by 0.6% and 6.6% in the past year, accelerating from 6.3% in August, while expectations were for 6.5%.
The prices of services increased by 0.8% (also the rental prices).
The upward climb in the inflation level increases estimates that the Federal Bank is expected to raise the interest rate by 0.75% in the upcoming decision.
In response to the inflation data, the futures contracts on the US stock indices fall sharply by up to 2.6%.
Pressure on the Biden administration ahead of the midterm elections, photo: Reuters
Yoni Penning, chief strategist of the transaction room at Bank Mizrahi Tefahot, says in response that "the figure continues to show decreases in items outside of core inflation, with an emphasis on fuel prices. It is highly doubtful that we will continue to see decreases in inflation from the energy items in the coming months, in view of the recent increase in oil prices. But we believe Because there is considerable potential for further declines in the prices of marketable products of all kinds, against the background of the strengthening of the dollar, the drop in sea freight prices and the increase in stocks in the US.
Inflation in the United States is rising at a higher rate than expected, photo: AFP
"On the other hand, the rent clauses continue to be established as a significant inflationary factor. Here too we see room for optimism, in light of the indications from the American billboards, which are expected to translate into the signing of more favorable contracts in the future.
Despite the surprise to the upside, we see the figure as neutral, or close to it, In the sense that it continues to moderate the fears of the American economy falling into an inflationary spiral. It obviously significantly strengthens the market's expectations for an interest rate increase of 0.75% by the Fed, on the second of November."
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