US inflation could soar to 6%, economists have allowed. Their forecast has been halved
Markets have begun to price in the likelihood of a Fed rate hike in December
Price growth in the second quarter of 2026 could reach 6 percent, according to a survey of analysts conducted by the Federal Reserve Bank of Philadelphia / Photo: unsplash.com / Aditya Vyas
Inflation in the United States in the coming months will accelerate sharply and remain above the Fed's target level for a long time, expect leading U.S. economists surveyed by the Federal Reserve Bank of Philadelphia, CNBC writes. They estimate that consumer price growth in the second quarter could reach 6%. The survey is conducted every three months, and last time the participants predicted inflation of only 2.7%. The situation changed after the outbreak of war between the U.S. and Iran, which led to the blockage of the Strait of Hormuz, critical for oil supplies, and provoked a jump in energy prices, CNBC recalls.
Full-year inflation is predicted by economists to soar to 3.5%, while core inflation, which excludes volatile food and fuel prices, will reach 2.9%. In the previous survey, both forecasts were 2.6%.
Price growth will remain high in the third quarter, according to the survey results. The overall inflation rate is expected to be 3%, core inflation is expected to be 2.9%. By the end of the year, the rates should slow down to 2.5% and 2.7%, respectively. However, even in the long term, the dynamics, according to economists, will exceed the Fed's target level of 2%: on the horizon of 10 years, the average annual growth in prices for goods and services will remain 2.4%, according to the surveyed experts.
Context
The U.S. Bureau of Labor Statistics released a series of unexpectedly strong inflation data this week, with both consumer and wholesale inflation hitting multi-year highs, primarily driven by higher energy prices. Consumer price growth was 3.8%, a peak in nearly three years, and the producer price index jumped 6%, the highest level since December 2022.
Markets are increasingly likely to assume that the regulator's next move will be an interest rate hike, CNBC reports . Traders estimate the possibility of tightening in December at almost 51%, in January - about 60%.
Coupled with the lack of breakthroughs on the situation in the Strait of Hormuz at the summit between the US and Chinese presidents, inflation fears intensified. This led to a jump in global Treasury bond yields. On Ma. 15, 10-year and 30-year U.S. bonds experienced the largest rise in yields in about a year. As a result, the stock market crashed: the session was the worst since March.
This article was AI-translated and verified by a human editor
