Inflation growth is getting closer to the Federal Reserve’s 2% target. Before the pandemic, the price of coffee was a daily routine for many people. However, prices have increased significantly since the pandemic, causing consumers to cut back on spending. The U.S. Bureau of Labor Statistics is set to release inflation growth metrics for September, which are expected to show a decline in price pressures.
The Dallas, Kansas City, New York, and Philadelphia Feds conduct surveys to gather data on manufacturing activity, including pricing trends. The combined prices received index (CPRI) is a leading indicator of inflation growth, showing a decline in recent months. This indicates that consumers are becoming more price-conscious and holding onto their money.
The CPRI trend is stabilizing, suggesting that inflation growth may slow down in the coming months. If the current pace of inflation growth continues, we could see annualized growth drop to 1.5% by March 2025. The regional central bank’s economic team anticipates a decline in headline CPI from 2.5% in August to 2.3% in September.
Manufacturers are finding it challenging to pass price increases onto consumers, indicating a moderation in price growth. This could lead to inflation growth returning to the 2% target sooner rather than later. The Federal Reserve may lower interest rates further in response to easing price pressures, which could benefit risk assets like cryptocurrencies.
In conclusion, the data suggests that inflation growth is slowing down, giving the Federal Reserve more room to maneuver with interest rates. This could lead to a long-term rally in risk assets, including cryptocurrencies like bitcoin and ether. The views expressed in this article are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
