(This interview has been edited for length and clarity.)
Michael R. Englund, Chief Executive Officer and Chief Economist for Action Economics
The markets have been looking at inflation reports for July and the markets are very sensitive to when we will see a reversal in these rapid price increases that we have seen month to month and also year to year. Many economists assume that June or July would be the month when these year-over-year figures peak and begin to decline. We got good news with CPI. Some of the fastest growing components, airline tickets and used cars, have stagnated. So it suggests that we may be at the end of this transition period, at least for those sectors. However, new car prices continued to rise, so that was a bad sign. And overall, many of the components continue to make gains. So we’re probably near the bend not necessarily out. There are some good signs of CPI. Unfortunately, PPI came out the next day. We saw 1% header and core gains after the same 1% gain last month. For the core, those were record headline wins, they’re almost records. A large part of the PPI report was the services sector. Service sector prices continue to rise. That’s a real resource to know what’s happening in the service sector. We have financial markets where you contract goods, services are a little murkier. So the fact that those prices continue to rise suggests that we are not out of the loop with these temporary price increases.