In the wake of a somewhat positive consumer price index report in July (CPI), the recently released product price index (PPI) was born. The sentence increased by 0.9 % in July, over the economists’ expectations, an increase of 0.2 %. The cooler consumer price index report was wandering in markets on a possible reduction in the field of federal reserves in September, but the numbers of the recent producers’ price index indicate that inflation is on the horizon.
Also read: Inflation in the United States rises to 2.7 % amid the effects of the tariff
Economists have long warned that the customs tariffs are taxes and will eventually be transferred to consumers at higher prices. The Trump administration has avoided somewhat, this scenario so far, which has confused analysts and critics. The extensive definitions have achieved additional revenues for the federal government, but according to the last Goldman Sachs analysis, American importers pay 64 % of the tax burden, and 14 % are paid by foreign exporters (through low prices), and American consumer shoulders 22 %. This analysis is consistent in one way or another with the federal reserve analysis in New York for definitions on China during the first Trump administration. However, until now, there has been no comprehensive price increase in all areas.
One of the theories indicates that the high price of customs tariffs is hidden in “Middle Mile”. Some American importers withdrew the shipping forward to alleviate the customs tariff/outside the device, and gather the increasing stock in the Middle Mile-the distance between warehouses and distribution centers. The retailer in general peak in mid -October, but due to the front loading, the capacity expanded slightly. The peak season elements have been paid forward for two to three months, and stocks are likely to reach retail distribution centers in September and October.
Except for food and energy, the basic product price index has risen, reaching the highest level since March. The high food prices contributed to the increase on the side of the goods, as raw products jump 12.8 % from June, and fresh and dry vegetables that are witnessing a significant increase in prices. The scene is far from what is certain, as countries like Vietnam face 30 % transfer fees and India faces a 50 % tariff.
Federal reserve in another difficult place when it comes to interest rates. Markets aim to relief, but “hidden inflation” can be sufficient to ensure a temporary stop. Goldman Sachs estimates that by October, consumers will pay about 67 % of the additional tax.
