Agency: Inflation in the United States or a new phase of inflation may be extended accordingly

ON 13 AUGUST, CGI REPORTED THAT THE UNITED STATES HAD INCREASED BY 0.1 PER CENT AFTER THE JULY CPI SEASON, COMPARED WITH 3.4 PER CENT, AND THAT THE CORE INFLATION CYCLE WAS 0.2 PER CENT AND 2.5 PER CENT, ALL OF WHICH MET MARKET EXPECTATIONS. ENERGY PRICES CONTINUED TO FALL, BUT SINCE AUGUST, INTERNATIONAL OIL PRICES HAVE RECOVERED, INCREASING UNCERTAINTY ABOUT FUTURE ENERGY PRICES. IN TERMS OF CORE INFLATION, THE PREDOMINANCE OF GOODS AND SERVICES, IN PARTICULAR THE CONTINUED RISE IN THE PRICE OF INFORMATION TECHNOLOGY PRODUCTS SUCH AS COMPUTERS AND SOFTWARE, REFLECTS THE FACT THAT THE MISMATCH BETWEEN SUPPLY AND DEMAND RESULTING FROM THE EXPANSION OF AI ' S CAPITAL EXPENDITURE IS GRADUALLY TRANSMITTED TO THE CONSUMER END. WE BELIEVE THAT INFLATION IN THE UNITED STATES HAS ENTERED A NEW PHASE, DRIVEN BY SUPPLY SHOCKS SUCH AS TARIFFS, OIL PRICES AND A GRADUAL SHIFT TO DEMAND EXPANSION BROUGHT ABOUT BY AI INVESTMENT, AND THAT THE DURATION OF INFLATION MAY BE EXTENDED ACCORDINGLY. FOR THE FED, THE DATA EASED SHORT-TERM INTEREST-RATE HIKES, BUT DEMAND-LED INFLATION REQUIRED MORE ATTENTION FROM POLICYMAKERS THAN SUPPLY-DRIVEN INFLATION. KIM XIAN