Prices falling
US producer prices fell -0.3 per cent in May.
The year-on-year figure fell faster than expected, down from 1.9 per cent last month to a mere 1.1 per cent increase, which is actually now a slower increase than we saw in 2018.
The Bureau of Labor Statistics reported the May figures here:
As such, the inflationary shock is now over.
Andreas Steno Larsen from Steno research shows in the below that consumer price inflation will follow the trend lower towards the 2 per cent target and beyond, in turn suggesting that no further interest rate hikes will be needed.
Welcome news indeed, and finally we should see the long-awaited Fed pivot.
The Reserve paused interest rates today, but talked tough and signaled that it would hike interest rates twice further again to combat persistent inflation if needed.
Equities markets have been anticipating the rollover in inflation for some time, with the S&P 500 recovering around 20 per cent higher since October last year.
