Inflation will ease but only after several months of rapid rise: US Treasury Secy


Big business, average families equally hit by spiralling prices.

Inflation will ease but only after several months of rapid rise: US Treasury Secy
US Treasury Secretary Janet Yellen said on July 15 she expects inflation to continue to rise for several months before easing.
“We will have several more months of rapid inflation. So I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it,” Yellen told CNBC during an interview.
The rapid rise in inflation has spooked many in the US. Large corporations are worried about the unprecedented increase in input costs. A recent survey revealed that US-based CEOs believed that inflation was the biggest threat to their business in the coming months. The same survey also saw US-based respondents reply in the negative when asked about their belief in the US Federal Reserve’s ability to control inflation.
Inflation is also quickly burning a hole in the pockets of average families. The consumer price index (CPI) for the country rose by 5.4 percent in June, an increase of 0.9 percent from the last month. The June increase was the highest recorded increase in CPI since June 2008. CPI is an index of a wide range of essential goods that average individuals need every month.
Along with consumer goods, housing prices have also seen a spike in prices. The US has recorded a nearly 15 percent increase, according to the latest reports. The last time the country had such levels of inflation was in the middle of and directly as a result of the 2008 financial crisis, which was caused by a bust in the prices of mortgage-backed securities.
“It’s a very different phenomenon (from the 2008 financial crisis). But I do worry about affordability and the pressures that higher housing prices will create for families that are first-time homebuyers or have less income,” Yellen said.
While inflation figures remain high, other trackers of inflation are showing signs of gradual improvement.
"Measures of inflation expectations I think still look quite well-contained over the medium term," Yellen said.
"Those expectations are actually a driver of price-setting behaviour. And so it is important that we monitor it carefully. But I believe fundamentally, you know, that this is something that will settle down."

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