The latest US inflation report is offering fresh insight into the health of the economy, showing where price pressures are easing and where they continue to persist. Joining me to unpack this is Stefan Rust, CEO of Truflation. Stefan, thank you so much for joining us.
Thank you. Thank you for having me.
What is the most important takeaway from the latest CPI report?
The government read came in at 3.4 — in line with market expectations. It is below last month's reading of 3.5, so the numbers seem to be coming down. However, it is still pretty sticky. It is not coming down as fast as it did in previous months. The biggest drivers are still the same — oil, the cost of energy, food, and shelter. Still not really at the 2% that Warsh is looking for. But it is on a consistent threshold.
Which categories are having the greatest impact and how are consumers actually feeling those pressures?
Food is a sensitive topic. People go to the grocery store seven to nine times a month — you feel that price pressure every time you go. Rent and monthly bills you feel every two weeks. Food has been creeping up slowly. Eggs have come down significantly over the last year — from $8 a dozen down to $2 or $3. But that is only eggs. All the other food categories seem to be creeping upwards. Energy at the utility — not the gas pump, but air conditioning and electricity bills — has been going up, mainly because of the demand from data centre rollouts across the US. Those costs are being translated directly onto household wallets.
What are current inflation trends suggesting about the direction of the US economy over the next few months?
We see a trend going upward — we do not see it slowing down. Services are going up. Wages are creeping upward — the demand for talent is very high, supply of talent is slightly reduced. Construction is going up because of the enormous buildout of data centres and factories across the US. Energy infrastructure is strained — try to get a generator right now and you will find the backlog is enormous. Tariffs, oil, and the Strait of Hormuz situation are all sensitivities still out there. We launched True Reflection — our real-time data product — and we have seen a consistent uptrend for the last couple of months. We are generally one and a half months ahead of government reporting, in some cases up to 90 days ahead. And if that is the case, we are going to slowly see an uptick in cost of living across US households.
How could the inflation data affect the Federal Reserve's next interest rate decision?
The Federal Reserve does not only look at inflation. It also looks at employment, wages, unemployment, money supply, and overall economic growth. And the US economy is performing very strongly right now — we are seeing a lot of private investment. The $500 billion from private capital being allocated to the Nvidia ecosystem alone is a significant input. We are seeing that same kind of investment rollout in AI as we once saw in power utilities — enormous investment in networking, infrastructure, housing, data centres, and energy. And the productivity gains from AI and compute are also going to help accelerate growth. When you add all of those factors together, our belief is that the Federal Reserve will actually reduce interest rates before the end of this year — counter to market expectation, which before the last read was leaning toward a hold or even a hike.
Why does real-time inflation measurement actually matter?
Simple — we live in a day and age where we want instant gratification. We have AI at our fingertips, mobile phones, communication, continuous access to any type of information. Why can we not have that for inflation metrics? Why can we not have that for the cost of goods? We can — and we should. That is why we built Truflation four years ago, aggregating over 100 million price points, consolidating, verifying, and tagging them so that we can then consolidate that into one number called the cost of goods and the movement of that — named inflation.
Thank you so much, Stefan.
Thank you very much.
