US Economics Community: "Core Inflation Index to Stabilize Starting Second Half of the Year"

Price Index Excluding Agricultural and Energy Sectors
Experts Say "Inflation Pressure Likely to Ease from Q4 This Year"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] American economists predict that the core Consumer Price Index (CPI) in the United States (excluding agricultural products and petroleum) will gradually stabilize starting from the second half of this year.

On the 23rd (local time), Bloomberg News cited the results of a survey released that day by the National Association for Business Economics (NABE), a research group composed of U.S. economists, reporting this outlook.

The core CPI excludes prices of agricultural products and energy sectors, which are highly volatile due to temporary external factors, making it a representative index to observe long-term inflation trends.

According to the survey, most respondents predicted that the Personal Consumption Expenditures (PCE) price index excluding agricultural and energy prices will record 2.1% in the fourth quarter of this year. This is a decrease from the 2.6% forecast for the PCE price index in April to June.

Haley Wade, who led the survey, explained, "The academic consensus is that inflation will stabilize from the second half of this year and there will be no sharp rebound next year."

Additionally, experts forecast that the Consumer Price Index will record 2.8% in the fourth quarter of this year and then decline again to 2.4% in the fourth quarter of next year.

Previously, the Consumer Price Index rose by 0.8% month-over-month in April, reaching the highest level since 2009, intensifying concerns about inflation. This led to calls for the U.S. Federal Reserve (Fed) to begin discussions on tightening policies soon. On the other hand, the Fed dismissed the possibility of prolonged inflation, attributing the price increase to a temporary supply bottleneck caused by explosive consumption recovery as the COVID-19 situation eased.

Meanwhile, experts foresee a significant economic rebound in the U.S. this year. According to the survey, the median forecast for this year’s economic growth rate predicted by experts rose sharply to 6.7%, up from the 4.8% forecast in March. Furthermore, two-thirds of all respondents expect the U.S. employment rate to recover to pre-COVID-19 pandemic levels as early as the end of this year.

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