Figures released in the US confirm that inflation fell from its 40 year high of 8.5%pa in March to 8.3%pa in April.
Food prices in the US continue to rise but given the US’s non-reliance on Russian oil and gas, energy prices have actually fallen. This is not the same for Europe.
President Biden has said he is committed o controlling inflation to help US consumer pockets and the economy.
Interest rates were increased again on 4 May by a double 0.25% usual basis points i.e., 0.5%pa after the 40-year high inflation rate detailed above.
April’s inflation rate is down but the effect of those interest rate increases in May have not yet been felt. With interest rate increases and no reliance on Russia, the $ has strengthened. This will mean that larger US exports will become more expensive to overseas buyers hence the Dow Jones and S&P 500 falling but imports from overseas into the US will be cheaper for US consumers.
We anticipate lower inflation in the US but also driving up profits of large exporters to the US such as UK FTSE 100 firms, Europe, China and Emerging markets.