The 0.6% m/m surge in core consumer prices in July, which pushed the annual core CPI inflation rate back up to 1.6%, from 1.2%, should end any speculation that the pandemic-related slump in demand will quickly push the economy into a deflationary spiral. But this is not a sign that the US is instead about to experience a bout of much high inflation because of supply restrictions. It mainly reflects a recovery in the prices of goods and services that were most affected during the early stages of the pandemic.
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