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Weekly Commentary

Inflation Hints at Stabilizing, but No Central Banker Is Celebrating

August 12, 2022
Jimmy Jean
Vice-President, Chief Economist and Strategist

Summary of the publication

In a year filled with anxiety-inducing developments, any feelgood news is welcome. And nothing relieves the anxiety better than signs inflation might be plateauing. Think of all the variables that are contingent on the inflation outlook—the size of rate hikes, the terminal rate, the housing market and the odds of a recession. After exceeding expectations for over a year, inflation is finally sending some encouraging signals. July’s surprisingly tame US CPI report featured rapidly abating pressures from reopening-related categories such as airfares and lodging. Prices fell for a second consecutive month in these categories. We also saw prices decline for core goods like used cars and apparel. There may be more to come on the goods side if the worst is indeed behind us on the supply chain front. As we’ve noted, container rates are normalizing and we’re seeing improvements in supplier delivery times, including in Canada.