Inflation fears have haunted Americans for the past few months, with inflation continuing to raise the price of normal goods has made living more difficult for the average person. And with so many people remaining unemployed because of the COVID-19 pandemic, the timing couldn’t be worse. However, just with any other part of the economy, the downsides are often needed for recovery to occur. This is especially as the inflation spike back in May was in large part due to parts of the economy reopening (such as travel) or other areas that saw unusually high demand during the pandemic which may not persist much longer (like bicycles). Without the economy opening, however, employment would only continue to fall as money would fail to circulate throughout the American economy.
Recently, however, these inflation fears may be going down. This is because The Institute for Supply Management’s service sector activity report published Tuesday showed the price paid sub-index fell 1.1 points in June but stayed historically elevated at 79.5. Reading reports over 50 indicates activity increasing while readings below 50 suggest a contraction. What this means is that although inflation is rising overall, the rate at which it is rising has slowed down. This is because based on the survey there is a dip in the rate of input price increases when compared to the prior month.
The long-term hope is that this trend continues, and inflation eventually lightens up. What do you think about these inflation trends? And will they hold to boost investor confidence?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.