Inflation in the United States increased to 2.7 % in June, which represents a sharp increase in five months, according to the latest consumer price data. UBS global wealth management analyzed the situation, noting that the increase in inflation is especially clear in basic commodities, which witnessed an increase in prices for two years (source). This height is largely due to a new tariff that affects home furnishings, devices, electronics, clothes and games.
Also read: American imports decrease with a vigor trade tariff
According to Indexbox, the American retail sector has witnessed a decrease in sales of electronics and home furnishings by 2 % and 1.1 %, respectively, once modified for inflation. Despite these decreases, total retail sales volumes managed to increase a modest 0.4 % per month, indicating a degree of flexibility in consumer spending.
Companies like General Motors are already pressing, as the auto company has told a loss of $ 1.1 billion in the second quarter profits due to the definitions. This has led to a 32 % decrease in the basic profit, prompting General Motors to implement price increase, cost reduction measures, and supply chain modifications. The ongoing tariff environment is a risk of more margins or requires high prices of consumer.
Mark Heifelli, UBS chief investment official, emphasizes the importance of monitoring the upcoming data on retail sales, inflation and consumer spending to understand who will eventually bear the cost of definitions. A beautiful beautiful draft law, which provides extended and partially funded tax reductions from customs tariff revenues, may provide some financial relief, although the extent of these revenues is still uncertain.
With the full impact of definitions, economists and policy makers closely monitor basic inflation, retail sales and corporate hikes. The certainty remains that the customs tariff has now become a concrete issue that affects the economy, and affects prices and corporate strategies.
Source: Indexbox Market Intelligence
