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Inflation could rebound, thanks to high energy prices and hot economic growth.
Inflation accelerated just 3.2% year-per-year, according to the July CPI report.
But prices are likely hovering around the 5% range when considering those factors, one economist says.
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Another wave of high prices could be coming for the US economy, thanks to factors like hefty government spending and high energy costs, according to one former White House economist.”I think we’re going to see kind of a saw-toothed inflation cycle,” Kevin Hassett, the Council of Economic Advisers chairman during the Trump administration, said in an interview with CNBC on Tuesday. “We’re going to see another inflation wave that’s going to be stimulated by high growth and by higher energy prices.”The former White House economic expert’s comments comes amid renewed optimism that disinflation is leading the US economy into a soft-landing, with prices dramatically cooler than highs recorded last summer. Inflation accelerated 3.2% in July, according to the latest Consumer Price Index report, edging closer to the Fed’s 2% price target.But there are still lingering price pressures in the economy that could bring on a resurgence of hot inflation, Hassett warned. GDP is set to grow nearly 6% over the third quarter, according to the Atlanta Fed’s most recent estimate, with Hassett predicting a 30%-40% chance GDP growth will clock in higher than real interest rates in the economy.
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