The “worst” of inflation in the US is likely to be in the boreal summer, with relief in the fall: official

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The "worst" of inflation in the US is likely to be in the boreal summer, with relief in the fall: official

WASHINGTON, Jun 10 (Reuters) – Inflation in the United States is likely to peak this summer and then begin to dissipate in the fall, a government official said Thursday after the Consumer Price Index rose by 0, 6% last month.

In the 12 months to May, the CPI accelerated by 5%, reaching its highest year-on-year increase since August 2008 and following a 4.2% increase in April. However, the official, who asked to remain anonymous, said it was largely due to a “base effect” given the low price level seen in the initial phase of the COVID-19 pandemic.

The Joe Biden government remains convinced that the current rise in consumer prices will be transitory, an assessment that was shared by professional forecasters, investors, consumers and businesses, according to the official.

“It will most likely peak in the coming months. We will probably see the worst this (boreal) summer, and (then) things are likely to start to return to normal in the fall,” the official said.

Investors also clearly expect low inflation going forward, looking at five-year asset positions, the official said.

“From a ‘stand behind what is being said’ perspective, it is pretty clear what investors think. And the same is true with surveys of consumers, business leaders and professional forecasters. They are all on the same page,” he said.

The official dismissed concerns expressed by Republican lawmakers that Biden’s proposed increase in spending on infrastructure, child care and community colleges will put more pressure on prices, given that spending would only start around 2023 and then spread over a decade.

“This is not stacking stimulus upon stimulus,” the official said. “This is tackling a long-term problem for a longer time. It’s a decade-long plan to fix 40-year problems,” he added.

(Reporting by Andrea Shalal; edited in Spanish by Carlos Serrano)

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