Inflation and Growth Data Frame Policy Risks
Key Questions
What was the year-over-year increase in U.S. import prices in June?
Import prices surged 7.1% year-over-year in June, the largest increase since 2022.
Which trading partner saw notably high import price growth?
Canada saw import prices up 20.7%.
How does this data impact the inflation outlook for the Fed?
This trade-driven inflation challenges the soft CPI/PPI narrative and provides additional ammunition for hawkish FOMC members.
The BEA’s October 29 advance estimate put Q3 GDP growth at 3.4% annualized, PCE prices at a 2.1% rate, and private domestic demand growth at 4.9%; the estimate may be revised. The Atlanta Fed’s initial Q4 GDPNow estimate is 3.2%, a model nowcast rather than reported GDP, while September PCE inflation was 3.6% year over year and core inflation 3.1%; flat real consumption and weaker income measures temper the growth picture. October CPI is due November 10, the November 25 GDP revision remains notable, and a newly cited PCE calendar requires verification.