We are still not sure what is going on with tariffs and inflation – or what happens next

While the consumer prices index checked high, it also comes under forecasts, although the latest reading of producers’ prices surprises up.

Some industries of heavily exposed tariffs recorded the spikes, but the July data showed less up the price of goods and more printing on some services.

“Despite this fortress, the tariff effect on consumer prices was probably less bad than expected,” said JPMORGan economists led by Michael Feroli on Friday in the note.

According to the bank, one potential explanation of the thickened inflation number is that companies eat customs costs for their profit margins, which are currently wide according to historical standards and can adapt the added costs without damaging capital or operating budgets.

Other explanations include the delayed effects of princes as a company before tariff supplies, the seasonality of prices, because inflation in summer should be softer than in winter, and the cost of the tariff is passed more through services rather than goods, JPMorgan added.

Another explanation could be that the importers of the tariff rates are actually valid are far below the numbers. The recent Barclays report found that in May the weighted tank was only 9% compared to the 12% bank estimate.

This is because it is necessary to move from the ground with higher tariffs, while more than half of us imported without duty this month. For example, at higher rates in Canada, you are applying for goods covered by the US-Mexiko-Kanada trade agreement.

“The real surprise in the resistance of the US economy is to respond to tariffs, but that the increase in the effective rate of the tariff was more modest than it normally thought,” the report said.

Barclays certainly said that the weighted average rate has increased up to 10% today and predicted that Aventle will be approximately 15% in Attle, as more products such as pharmacies will be affected.

Businesses vs. consumers

Citi Research still does not see much evidence of the wide price pressure from tariffs and has assigned a recent increase in service anomalies, such as 5.8% jump in portfolio management as a result of assembly at assets.

Citi also does not expect that consumers will be affected by a large increase in prices in the future, although more fees are expected to appear.

“Sokter asks that companies will have difficulty handing over the customs costs of consumer,” said US chief economist Andrew Hollenhorst. “Although some companies could still try to slowly increase the princes in the coming months, experience that these increases will be modest. This should reduce concerns about the increased risk of inflation and increase the concerns that profit margins will be reduced.”

Goldman Sachs, on the other hand, predicted that consumers would pay most of the customs costs. Since June they absorbed 22%, but this number should skip to 67%by October if the formula seen in the early wheels of Trump’s business events did not last.

In businesses, the burden reduces from 64% to 8%, while foreign suppliers will see an increase from 14% to 25% impact on the tariff.

Determination of secrets about what tariffs are doing – or not doing – for inflation, they have the main consequences for the federal reserve system that tries to balance both sides of their dual mandate.

The tariffs maintained inflation stubbornly above 2% Fed’s goal, which caused politicians to hold the offered cakes. However, weakness in the data on jobs increased the alarms for employment and application for eating.

“The proof is that almost all the cost of tariffs is born by domestic companies,” wrote Holelenhorst Citi. “The lack of passage should reduce the persistent fears of official inflation of the flexible and allow a number of cuts in September in September. If the markets underestimate the potential for faster and/or deeper cuts.”

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