The Weekly Brief

US inflation data for June came in significantly higher than economists expected – headline consumer price index (CPI) inflation rose to 5.4% year on year (y/y), while core CPI rose to 4.5% y/y – the highest reading since 1991. Many of the price increases in areas most affected by the reopening are likely to temper in the coming months – used cars, hotels and airfares, for example. But price increases in other areas raise the prospect that underlying inflationary pressures are set to linger longer than most currently expect.