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Business

Prices have not peaked yet, says Unilever CEO

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Unilever CEO Alan Jope photographed at the World Economic Forum in May 2022.

Hollie Adams | Bloomberg | Getty Images

The CEO of consumer goods giant Unilever said Tuesday that prices would likely continue to rise in the near term, adding that his firm had a playbook for high inflation thanks to its business dealings in markets like Argentina and Turkey.

Speaking to CNBC’s Joumanna Bercetche at the World Economic Forum in Davos, Switzerland, Alan Jope talked about how his firm was managing its operations in the current climate.

“For the last 18 months we’ve seen extraordinary input cost pressure … it runs across petrochemical derived products, agricultural derived products, energy, transport, logistics,” he said.

“It’s been feeding through for quite some time now and we’ve been accelerating the rate of price increases that we’ve had to put into the market,” he added.

“So far, the consumer response in terms of volume softness has been very muted, the consumer has been very resilient,” Jope said.

“We do see the prospect of higher volume elasticity as winter energy costs hit, as households’ savings levels come down and that buffer goes away and as prices continue to rise,” he said.

Last October, Unilever published its third-quarter results for 2022, with the firm reporting price growth of 12.5%.  

Jope was asked if he foresaw any moderation when it came to inflationary pressures. “It’s very hard to predict the future of commodity markets,” he replied.

“Even if you press the oil major CEOs, they’ll be a little cagey on giving an outlook on energy prices.”

Unilever’s view, he said, was that “we know for sure there’s more inflationary pressure coming through in our input costs.”

“We might be, at the moment, around peak inflation, but probably not peak prices,” he went on to state.

“There’s further pricing to come through, but the rate of price increases is probably peaking around now.”

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Unilever has a global footprint and owns brands including Ben & Jerry’s, Magnum and Wall’s.

During his interview with CNBC, Jope touched upon the international dimension of his business and how the experience of operating in a range of markets was steering it through the current climate.  

“Nobody running a business at the moment has really lived through global inflation, it’s a long time since we’ve had global inflation,” he said.

“But we’re used to high levels of inflation from doing business in places like Argentina, or Turkey, or parts of Southeast Asia,” he added.

“So we do have a playbook, and the playbook is that it’s important to protect the shape of the P&L by landing price.”

“And so it’s not that we’ve taken more price, we just started acting earlier than many of our peers, and the guidance that we’ve been getting from our investors is they support that and feel that that’s an appropriate action.”  

This, Jope explained, was “something we have learned from being in these high inflationary markets, though … much of that inflation is currency weakness, historically.”

“But now those markets are having to deal with the combination of commodity pressure and currency weakness. So our instinct is to act quickly when costs start coming through.”

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Health

Flu activity peaked without post-holiday spike in cases, but respiratory virus season is still in full swing

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CNN
 — 

Flu continues to be very prevalent in the US, but the first wave of the season – which swept through the country weeks earlier than usual – appears to have peaked.

The weeks after the year-end holidays brought sustained high levels of transmission and hospitalization, but flu activity doesn’t seem to have spiked as many public health experts cautioned.

Still, even after weeks of improvement, data published Friday by the US Centers for Disease Control and Prevention shows that more than 12,400 people were admitted to the hospital for flu in the first week of the new year, and nearly 9% of lab tests were positive for flu.

About 4% of everyone who visited a health care provider last week had respiratory virus symptoms, including fever plus a cough or sore throat, which is nearly twice as high as the national baseline.

Flu is notoriously unpredictable, and a season can bring multiple peaks of activity.

“It’s pretty clear that there was a peak of activity, but that doesn’t mean we won’t have another one,” Lynnette Brammer, lead of the CDC’s domestic influenza surveillance team, said last week. “Things could turn around and go back up.”

Flu vaccination rates remain far below ideal levels, and hospitals remain very full, leaving the US vulnerable as respiratory virus season drags on.

“It’s certainly something we’re gonna watch really carefully. We’re just going to have to keep an eye on all the data, see what viruses are circulating and who’s getting sick, and what sort of impact that’s having,” Brammer said.

“And I want to remind people that if they haven’t yet gotten vaccinated, please do so. It’s not too late.”

As of December 31, about 171 million doses of flu vaccine have been distributed in the US – enough to cover only about half of the population. Just 40% of adults had gotten their shot by the end of November, and just 48% of children had gotten their shot by the end of December, according to CDC data.

Through January 7, the CDC estimates that there have been 24 million illnesses, 260,000 hospitalizations and 16,000 deaths from flu this season.

Although this season did hit earlier than usual, outcomes are within an expected range – at least so far.

“It’s not an unusually high influenza season. It’s sort of falling in with the mid- to higher range, but it’s within the limits of what we normally expect to see during a regular flu season, unfortunately,” Brammer said. “So basically, this is looking like a typical flu season, except in terms of the timing. It was just a little bit earlier than normal.”

Overall, flu and other respiratory virus activity remains “high” or “very high” in about half of states, according to the new CDC data, and the US continues to contend with multiple respiratory viruses that are circulating at high levels.

RSV activity has also peaked in the US, reaching a season high in mid-November. But even after a sharp decrease in trends over the past month and a half, weekly hospitalization rates for RSV remain higher than the peaks for most recent seasons.

RSV is particularly dangerous for children, and at least 13 out of every 100,000 children younger than 5 were hospitalized for RSV in the last week of the year, bringing the cumulative hospitalization rate this season up to 5 out of every 1,000 children in this age group.

Meanwhile, Covid-19 activity has been trending up for the past few months.

Hospitalizations have been on the rise since November and have surpassed the most recent peak from this summer, before the updated booster shot was available, federal data shows.

Case reporting has become more irregular over the course of the pandemic, but wastewater monitoring data from Biobot Analytics suggests that Covid-19 activity is higher than it was during the Delta surge, too.

The rapidly growing Omicron subvariant XBB.1.5 now accounts for an estimated 43% of new Covid-19 cases in the US, according to the CDC, making it the strain that is causing the most new infections in the US.

Notably, it is the only variant that is gaining ground in the U.S.

XBB.1.5 was first detected in New York in October. It grew quickly throughout the Northeast, and the CDC estimates that it accounts for more than 80% of new cases in that region.

From there, XBB.1.5 seems to be picking up steam along the Eastern Seaboard. It now accounts for about half of Covid-19 cases in the mid-Atlantic states and nearly one-third of cases in the Southeast. It is less prevalent in other US regions.

The rise of XBB.1.5 has coincided with an increase in Covid-19 hospitalizations, especially among seniors.

XBB.1.5 has a key mutation that helps it bind more tightly to cells. Experts believe that may be helping it be more infectious.

Still, just 16% of the US population has received their updated Covid-19 booster shot. Data from October shows that people ages 5 and up who had received an updated booster had 19 times lower risk of dying from Covid-19 compared with those who were unvaccinated. Chances of testing positive were three times lower for those who had their updated booster.

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Health

RSV and flu cases falling in the US, tripledemic ‘has peaked’

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America’s dreaded ‘tripledemic’ looks set to be short-lived, with weekly flu and respiratory syncytial virus (RSV) figures already on the decline.

Today’s weekly flu report shows there were just over 30,000 confirmed flu infections nationwide during the week ending on December 10. 

While this is preliminary data, it is a 30 percent drop from the previous week and the first time cases have fallen since the start of flu season.

Meanwhile, Dr Ashish Jha said at a White House press briefing Thursday that RSV infections had already peaked with numbers starting to come down ‘pretty quickly’. 

The news will come as a relief as it appears Covid could be on the rise once again, and a new illness emerges with an outbreak of the bacterial infection Strep A. 

Flu cases dropped 30 percent week-over-week, from 43,960 last week to 31,287 this week. It is another signal America’s ‘tripledemic’ is past its peak

RSV cases continued to decline in the latest CDC update. The nation recorded 4,391 new infections during the week ending on December 10, the lowest total since late September

Fears about a so-called ‘tripledemic’ first emerged over summer when Australia and New Zealand – whose winter is during America’s summer – suffered devastating flu seasons.

Experts have pointed to lockdowns, mask mandates and other pandemic orders over the past two years as reason why this year’s flu season has been more brutal than those past. 

This is the worst flu season America has suffered since the Swine Flu Pandemic of 2009 – and experts have warned for months that it would be a long and harsh winter.

At one point earlier this month, hospitals were more full than they had ever been during the pandemic.  

In Los Angeles, New York City and in some parts of Washington state, officials even recommended the return of masks in indoor public places.

The latest Centers for Disease Control and Prevention (CDC) update shows there were 31,287 cases of flu last week – a massive underestimate because many cases go undetected as Americans weather symptoms of the virus at home.

The CDC reports that 25.4 percent of tests for the flu came back positive last week, matching the figure from a week earlier. 

During the week that ended on December 3, a new seasonal high of 43,960 flu cases were confirmed in the US.

The flu does not present danger to a majority of Americans, but it can often strike down the elderly, young children and the immunocompromised.

Last week, CDC officials announced that there had been 9million confirmed flu cases, 7,800 hospitalizations and 4,500 deaths caused by the annual virus this season.

Spread of the virus has declined in recent weeks. From the week ending on October 15 to the week ending November 12, flu infections in America increased seven-fold, from 2,716 to 19,288 weekly.

Over the past month, from November 12 to December 10, cases increased 62 percent.

Week-over-week, cases increased 48 percent from November 19 to 26, from 25,990 to 37,280 confirmed.

Growth in cases slowed at the end of November, though, increasing only 16 percent to 43,960 from the week ending on November 26 to December 3.

Only half of US states are considered to be suffering high flu activity by the CDC, down from 44 out of 50 only two weeks ago.

The CDC reports that 25 states are recording ‘very high’ levels of flu circulation, and eight states have reached the highest level the agency tracks

The CDC reports eight states suffering the highest level of activity: Colorado, Idaho, Kentucky, Nebraska, New Mexico, Oklahoma, Tennessee and Washington. Last week, 10 states met the criteria.

The flu was not the only annual virus that ramped up again this fall, only to now be on the decline after a late-Fall peak.

The CDC recorded 4,391 new RSV cases during the week ending on December 10, a 63 percent fall from the previous week.

CDC calls for people to wear masks over Christmas to stop spread of FLU and RSV

America’s leading health officials are now recommending masking to prevent the spread of RSV and the flu this winter – not just Covid.

Dr Rochelle Walensky, director of the Centers for Disease Control and Prevention (CDC) said during a briefing last week, ‘we also encourage you to wear a high-quality, well-fitting mask to prevent the spread of respiratory illnesses’, when discussing prevention measures for the flu and respiratory syncytial virus (RSV).

It comes as nearly every state in America is recording ‘very high’ levels of flu as the US is slammed by a lockdown-fueled resurgence of respiratory viruses this fall. The CDC reports 9million flu infections and 4,500 deaths caused by the virus this flu season – with the worst expected to arrive in the coming weeks. Typical flu season runs from October to May each year.

Experts have blamed the deadly flu outbreak on lockdowns, mask mandates, social distancing orders during the Covid pandemic, which left the US population ‘immune naïve’ as they were robbed of vital exposure to healthy germs.

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It is the first week with less than 10,000 confirmed cases since the week ending on October 15, and the lowest point since late-September.

These are preliminary figures. It is likely that the CDC will increase the number of confirmed RSV cases from this week in future reports. 

The virus does not pose much danger to adults, but can cause severe illness or even death in young children.

Officials report that around 300 to 500 children will die from the virus each year.

It has been running out of steam in recent weeks, and officials are starting to assure Americans that RSV should not be as much of a threat in the near future.

Dr Ashish Jha, the White House Covid Response Coordinator, said during a briefing Thursady that RSV is ‘no doubt’ starting to decline. 

His sentiments echo that of Dr Rochelle Walensky, director of the CDC, who said that RSV was starting to burn out during a briefing last week.

Covid is starting to rise in place of the two annual viruses, though. The US is averaging 64,889 daily infections, a 33 percent increase over the last two weeks.

While still a figure dwarfed by the 160,000 cases averaged this time last year, officials fear it could signal that the virus is starting to reemerge right before the holidays.

America also suffers 373 deaths per day from Covid as well, a 50 percent increase in two weeks. 

A deadly wave of Strep A has kicked off in America, adding another potential danger to the mix.

The nation has recorded two pediatric deaths in Colorado from the bacteria infection. 

Hospitals in Arizona, Colorado, Texas, Washington and West Virginia are also reporting abnormally high levels of the disease. 

It comes on the heels of an outbreak in the UK which has so far killed 19 children – significantly more than usual for this time of the year.

The decline of the flu and RSV come right as some officials use the respiratory illnesses as reason to bring back masks.

Last week, health officials from 12 counties in Washington state – including Seattle’s King County – signed a letter urging residents to wear masks indoors.

On Friday of last week, the New York City health department did the same, putting out an advisory to mask up in indoor public places, including on the subway and in the gym.

Then, Los Angeles officials also issued an indoor mask advisory over the weekend.

None of these are mask mandates, though, and the 20million Americans living in effected areas will not be forced to mask indoors.

In Philadelphia, school district officials announced Wednesday that masks will be required in schools from January 3 to 13 – the first ten days after the winter holiday. 

Surges of respiratory viruses this fall have been blamed on an ‘immunity gap’ thought to have built up during the pandemic when Covid restrictions shut out seasonal bugs.

Experts say it is likely these types of mask advisories and other pandemic-related orders likely played a role in this recent surge of viral illnesses.

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Science

The Geminid meteor shower of 2022 peaked tonight (photos)

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One of the most spectacular meteor showers of the year peaked tonight and avid skywatchers all over the world were able to capture the spectacle, although some complained that bad weather spoiled their views.

The Geminids are the second richest meteor shower of the year, surpassed only by the August Perseids. A product of debris from the unusual asteroid 3200 Phaethon, the Geminid meteor showers at their peak can produce up to 120 shooting stars per hour. When the sky is clear, skywatchers can catch up to two meteors per minute during the peak, which this year fell on the night of Dec. 13. 

In California, photographer Tayfun Coskun caught some beautiful shooting star streaks above a shipwreck in Point Reyes, a fishing boat skeleton stranded on a sand bar near the small town of Inverness some 40 miles (64 kilometers) northwest of San Francisco. Other skywatchers took their shots against other spectacular backgrounds.

Related: Meteor showers 2022-23: Where, when and how to see them

Photographer Paula Corrette shared a mesmerizing snap on Twitter showing a star-studded sky featuring the big reddish spot of Mars and a meteor streak slicing through the photograph right next to it. 

“A little condensation on the lens added a bit of shimmer to Mars as a meteor flew by,” Corrette said in the tweet.

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Another photographer, Frankie Lucena, shared a clip showing a bright streak of light crossing the dark sky near Porto Rico’s Lajas Aerostat radar station.

“Geminid meteor near the Lajas Aerostat facing SE from Cabo Rojo, PR,” Lucena tweeted.

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A Twitter user called WonderPixel shared footage from two web cameras showing a meteor brightening up the night in Maine. The user said this was the second catch in two consecutive nights. 

“Wow, got another meteor on camera tonight here at http://FreeportMaineWebcam.com. Two days in a row! It’s aiming for Harpswell, and two cams caught it,” the user wrote. 

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Not everyone who was watching was taking images, but many still enjoyed the show. 

Meteorologist Ed Piotrowski counted 15 meteors in only half an hour and despite less than perfect observing conditions.

“Despite the brightness of the waning gibbous moon and some cirrus clouds, I saw 15 meteors in roughly 30 minutes. Nothing terribly bright though,” Piotrowski tweeted. 

Many amateur radio operators were able to detect the signal of the space rocks’ passing  through Earth’s atmosphere on their devices, according to ham radio enthusiast and podcaster Bryce Foster.

Some observers, however, were less lucky as clouds obstructed their view. A Detroit-based Twitter user called Delminico Primo said: 

“Looks like Mother Nature is going to block my view of any #Geminids tonite. Was out for a few hours, and had a veiled look at just the brightest objects (Mars, Betelgeuse, and Capella in that first shot), but the clouds are having their way now.”

The same was true for Jon Van Horne in Florida: “Y’all seen any #Geminids tonight from Space Coast, FL?! YA! neither me.” Van Horne said in a tweet accompanied with a picture of a cloudy dusk sky.

The Geminids will continue through Dec. 17, but the frequency of the meteors will drop sharply. The next significant meteor shower will be the Ursids, which will peak around Dec. 22..

Follow Tereza Pultarova on Twitter @TerezaPultarova. Follow us on Twitter @Spacedotcom and on Facebook. 



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Business

Inflation peaked but will remain above pre-Covid levels: Mastercard

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Inflation has already peaked, but it will remain above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East and Africa at the Mastercard Economics Institute.

“Inflation has seen its peak this year, but it will still be above what we had been used to pre-pandemic next year,” Mann told CNBC’s “Squawk Box Asia” on Friday. 

It’ll take a few years to return to 2019 levels, he said. 

“We do expect that we go back down in the direction of where we were back in 2019 where we were still debating how many countries needed negative interest rates.”

Central banks around the world have been hiking interest rates as recently as November in response to high inflation.

They include central banks from the Group of 10 countries — such as the U.S. Federal Reserve, the Bank of England and the Reserve Bank of Australia — as well those of emerging markets, such as Indonesia, Thailand, Malaysia and the Philippines, Reuters reported.

The Fed will hold its December policy meeting this week, where it is expected to hike interest rates by 50 basis points. The central bank has raised rates by 375 basis points so far this year. 

“Inflation has become that big challenge. It’s been spiking and staying very high,” Mann said. But he warned that it would be risky if central banks end up hiking rates more than they need to. 

“The challenge is if you’ve lost orientation of where the sky and the ground is, you’re not quite sure where you need to end up,” Mann said. 

It would be a “serious scenario” if central banks “end up going slightly too far and then need to reverse relatively quickly,” he added. 

Consumer spending

Despite high inflation, Mann said, U.S. consumers are still willing to engage in discretionary spending in areas such as travel. 

Travel recovery in the U.S. is strong and people are still choosing to spend on experiences rather than material goods, Mann said.

And they are being frugal about their spending on necessities in order to be able to afford non-essentials, he added.

“There is something in the back of people’s minds that worries them that even though it’s not very likely, it’s still possible that those [Covid] restrictions [will] come back,” he said. 

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Business

Mortgage rates drop amid signs that inflation may have finally peaked

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The 30-year fixed-rate mortgage averaged 5.13% in the week ending August 18, down from 5.22% the week before, according to Freddie Mac. Despite the latest drop, rates are still significantly higher than this time last year, when the 30-year was 2.86%.

“Inflation appears to be beyond its peak, which has stopped the rapid increase in mortgage rates that the housing market was experiencing earlier this year,” said Sam Khater, Freddie Mac’s chief economist.

Higher mortgage rates have taken a toll on the housing market this summer. In addition to a sharp drop in the sales of both new and existing homes, fewer people are applying for mortgages.

“The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability,” said Khater. “As a result, over the rest of the year purchase demand likely will continue to drag, supply will modestly increase, and home price growth will decelerate.”

Mortgage application activity was lower last week from the week before and overall applications have declined to their lowest levels since 2000, according to the Mortgage Bankers Association.

“Home purchase applications continued to be held down by rapidly drying up demand, as high mortgage rates, challenging affordability, and a gloomier outlook of the economy kept buyers on the sidelines,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

However, he said, if home price growth slows more significantly and mortgage rates move lower, purchase activity may bounce back later in the year.

Still, affordability remains a challenge for many prospective home buyers, especially when compared with the cost of financing a home just last year.

A year ago, a buyer who put 20% down on a $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 2.86% had a monthly mortgage payment of $1,292, according to calculations from Freddie Mac.

Today, a homeowner buying the same priced house with an average rate of 5.13% would pay $1,700 a month in principal and interest. That’s nearly $408 more each month.

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Business

Has inflation peaked? Maybe, but it could be ‘painfully slow’ to fall

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Kaltbaum Capital Management President Gary Kaltbaum and Strategic Wealth Partners CEO Mark Tepper discuss if inflation is still accelerating on ‘Cavuto: Coast to Coast.’

The cooler-than-expected July inflation data fueled hopes that consumer prices peaked earlier this summer after a year of relentless increases that crushed Americans, created a political firestorm for President Biden and forced the Federal Reserve to hike interest rates at the fastest pace in decades.

The consumer price index climbed 8.5% in July from the previous year, a bigger drop from the 9.1% recorded in June than economists projected. On a monthly basis, the index did not move at all as decreases in the cost of oil, gasoline and airfares offset increases in food and rent. 

When excluding more volatile measurements of food and gasoline, prices jumped 5.9% in July, matching the previous month. 

While the slowdown is likely a welcome respite for the Fed as it tries to wrestle inflation under control, experts cautioned that inflation remains painfully high and could be slow to return to pre-pandemic levels around 2%.

INFLATION IS STILL WIPING OUT THE AVERAGE AMERICANS’ WAGE GAINS

“We’re not out of the woods by a long shot,” said Peter Earle, a research fellow at the nonprofit think tank the American Institute for Economic Research. “There’s a long way to go, and a lot can happen before we get back down to that 1.5% to 2.5% annual inflation area that Americans are used to.”

Whether inflation has truly peaked remains deeply uncertain, particularly as COVID-19 and the Russian war in Ukraine continue to disrupt the global economy. Economists have previously predicted that the inflation wave crested, only to be proven wrong the following month.

Still, the expectation is for the torrid pace of price increases to slow in the coming months, though it may be a long descent back to “normal.”

JULY INFLATION BREAKDOWN: WHERE ARE RISING PRICES HITTING AMERICANS THE HARDEST?

“Within a month or two, there will be clearer evidence that inflation has peaked, but also evidence that the decline is painfully slow,” said Seema Shah, the chief global strategist at Principal Global Investors. “Households will unfortunately continue to feel the severe strain of elevated price pressures on their budgets, while wage growth persistence will take its toll on corporate profit margins.”

A customer shops at a supermarket in Millbrae, Calif., Aug. 10, 2022.  (Li Jianguo/Xinhua via Getty Images / Getty Images)

Scorching-hot inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. The burden is disproportionately borne by low-income Americans whose already-stretched paychecks are heavily impacted by price fluctuations. 

Although American workers have seen strong wage gains in recent months, inflation has largely eroded those. Real average hourly earnings decreased 0.5% in July from the previous month when accounting for higher consumer prices, according to the Labor Department. On an annual basis, real earnings actually dropped 3% in July. 

“While the boost to overall economic prospects is welcome, easing inflation will ring hollow with many down-market consumers whose wages are falling in real terms despite the decline in gasoline prices alone adding about $400 million dollars back to household balance sheets,” said RSM chief economist Joe Brusuelas. 

Blueberries and cherries for sale at a farmers market in the Fort Greene neighborhood of Brooklyn, N.Y., July 16, 2022.  (Allison Hess/Bloomberg via Getty Images / Getty Images)

Despite a monthly decline in energy prices in July, Americans are still paying substantially more for gasoline (32.9%) than they were one year ago. Households are also confronting rising food prices, which are up a whopping 13.1% over the past year, the most significant increase since 1979, and increasingly steep rent, which is up 6.3%.

In fact, the average American is shelling out an extra $717 a month because of the hottest inflation in decades, according to an analysis from the Joint Economic Committee Republicans.

“While prices did not change from June to July 2022, prices increased 13.3% from January 2021 to July 2022, costing the average American household $717 in July 2022 alone,” the analysis said.

Even if prices stopped increasing altogether, the inflation that already occurred between August 2021 and July 2022 would cost the average American household an extra $8,607. 

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President Biden, who has been on the defensive for months over skyrocketing prices, lauded the cooler-than-expected report on Wednesday as evidence that inflation “may be beginning to moderate.” But Biden acknowledged that the battle against inflation may not be over yet. 

“We could face additional headwinds in the months ahead,” he said. “Our work is far from over.”

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Business

There Are Signs Inflation May Have Peaked, but Can It Come Down Fast Enough?

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Growing signs that price pressures are easing suggest that June’s distressingly high 9.1% increase in consumer prices will probably be the peak. But even if inflation indeed comes down, economists see a slow pace of decline.

Ed Hyman,

chairman of Evercore ISI, pointed to many indicators that  9.1% might have been the top. Gasoline prices have fallen around 10% from their mid-June high point of $5.02 a gallon, according to AAA. Wheat futures prices have fallen by 37% since mid-May and corn futures prices are down 27% from mid-June. The cost of shipping goods from East Asia to the U.S. West Coast is 11.4% lower than a month ago, according to Xeneta, a Norway-based transportation-data and procurement firm.

Easing price pressures and improvements in backlogs and supplier delivery times in business surveys suggest that supply-chain snarls are unraveling. Mr. Hyman noted that money-supply growth has slowed sharply, evidence that monetary tightening is starting to bite.

Inflation expectations also fell recently—an upbeat signal for the Fed, which believes that such expectations influence wage and price-setting behavior and thus actual inflation. The University of Michigan consumer-sentiment survey showed that longer-term inflation expectations slipped from June’s 3.1% reading to 2.8% in late June and early July, matching the average rate during the 20 years before the pandemic.

Bond investors are less worried about inflation, based on the “break-even inflation rate”—the difference between the yield on regular five-year Treasury bonds and on inflation-indexed bonds—which has dropped to 2.67% from an all-time high of 3.59% hit in late March.

Inflation-based derivatives and bonds are projecting that the annual increase in the CPI will fall to 2.3% in just a year, around the Fed’s 2% target (which uses a different price index), according to the Intercontinental Exchange.

Roberto Perli,

economist at Piper Sandler, calls such an outcome “optimistic but not totally implausible.” From February through early June, investors thought inflation would still be between 4% and 5% in a year.

“It’s a step in the right direction, but ultimately, even if June is the peak, we’re still looking at an environment where inflation is too hot,” said

Sarah House,

senior economist at Wells Fargo, who expects fourth-quarter inflation between 7.5% and 7.8%. “So peak or not, inflation is going to remain painful through the end of the year.”

And the slower it is to ebb, the larger the likelihood of a damaging downturn, said

Brett Ryan,

senior U.S. economist at Deutsche Bank.

Core inflation, which strips out volatile food and energy prices and is considered a better measure of inflation trends, was 5.9% in June, down from a peak of 6.5% in March. But Ms. House and Mr. Ryan both expect core inflation to revive and peak sometime around September, as strong price growth for housing and other services combines with low base comparisons in the 12-month calculation.

“The more persistent inflation pressures, the higher the Federal Reserve needs [interest rates] to go to address them,” said Mr. Ryan. “That argues for a larger recession risk.”

Fed Chairman

Jerome Powell

has said the central bank wants to see clear and convincing evidence that price pressures are subsiding before slowing or suspending rate increases.

“The moment of truth comes at the end of this year,” said Mr. Hyman. “If the Fed keeps on raising rates, then they’d invert the yield curve. I think that would increase the odds of recession enormously. It would probably also lower inflation, although it also seems to already be slowing, and will probably be even slower by then.”

Aichi Amemiya,

U.S. economist at Nomura, said that though it is too early to call it, his forecast sees June as the peak for the annual measure of overall inflation. However, the month-over-month change in core CPI will be key to watch in coming months, he said. If it slows from June’s pace of 0.7% to 0.3% on a sustained basis by year-end, he expects the Fed to start planning to ease up on rate increases. That, however, will be hard to achieve, said Mr. Amemiya, “which means the Fed will likely continue tightening even after the economy enters a recession.”

Around the turn of the year, economists were generally confident that inflation would peak in early 2022, as energy prices stabilized and supply-chain pressures eased. Then Russia invaded Ukraine, and energy prices soared. Buzz about  “the peak” crescendoed again when inflation slid to an 8.3% annual rate in April, from 8.5% in March. But gasoline prices flared up again, and gains in food and rent picked up, too.

There is plenty of potential for another reversal in coming months, said Ms. House.

“When we look at ongoing core inflation pressures, it wouldn’t take much in the way of a commodities price shock for us to reach another high,” she said, adding that possible examples include an escalation of the Russia-Ukraine conflict, a hurricane that shuts down an oil refinery, or an outage at a key semiconductor or auto plant. “We all hope we’re at the peak. But hope is not really an inflation strategy right now.”

Write to Gwynn Guilford at gwynn.guilford@wsj.com

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Fed’s Mester says inflation hasn’t peaked and multiple half-point rate hikes are needed

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Cleveland Federal Reserve President Loretta Mester said Friday that she doesn’t see ample evidence that inflation has peaked and thus is on board with a series of aggressive interest rate increases ahead.

“I think the Fed has shown that we’re in the process of recalibrating our policy to get inflation back down to our 2% goal. That’s the job before us,” Mester said in a live interview on CNBC’s “The Exchange.”

“I don’t want to declare victory on inflation before I see really compelling evidence that our actions are beginning to do the work in bringing down demand in better balance with aggregate supply,” she added.

Mester spoke the same day the Bureau of Labor Statistics reported that nonfarm payrolls rose by 390,000 in May, and, importantly, that average hourly earnings had increased 0.3% from a month ago, a bit lower than the Dow Jones estimate.

While other recent data points have shown that at least the rate of inflation increases has diminished, Mester said she will need to see multiple months in that trend before she’ll feel comfortable.

“It’s too soon to say that that’s going to change our outlook or my outlook on policy,” she said. “The No. 1 problem in the economy remains very, very high inflation, well above acceptable levels, and that’s got to be our focus going forward.”

Recent statements from the rate-setting Federal Open Market Committee indicate that 50 basis point — or half-point — rate increases are likely at the June and July meetings. Officials are likely then to evaluate the progress that the policy tightening and other factors have had on the inflation picture.

But Mester said any type of pause in rate hikes is unlikely, though the magnitude of the increases could be reduced.

“I’m going to come into the September meeting, if I don’t see compelling evidence [that inflation is cooling], I could easily be at 50 basis points in that meeting as well,” she said. “There’s no reason we have to make the decision today. But my starting point will be do we need to do another 50 or not, have I seen compelling evidence that inflation is on the downward trajectory. Then maybe we can go 25. I’m not in that camp that we thinks we stop in September.”

Mester’s comments were similar to statements Thursday from Fed Vice Chair Lael Brainard, who told CNBC that “it’s very hard to see the case” for pausing rate hikes in September. She also stressed that quashing inflation, with is running near 40-year highs, is the Fed’s top priority.

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Why inflation may have already peaked

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There’s good news and bad news in Tuesday’s inflation report.

  • The bad news: Consumer prices have risen by a shocking 8.5% over the past year, a rate of increase not seen in more than 40 years.
  • The good news: That number has probably gotten as high as it’s going to get, and could soon start coming down.

What they’re saying: Inflation “has likely peaked,” said Bank of America analysts on Tuesday. Their counterparts at Capital Economics concurred, saying that the 8.5% figure would “mark the peak” for the series.

How it works: The headline inflation figure, which spiked by 1.2% in March alone, has been driven overwhelmingly by energy prices. Core inflation, which excludes food and energy, was relatively subdued, rising only 0.3%.

  • Good news is likely in the coming April inflation report: The price of oil has fallen to $94 a barrel, down from a peak of $124 on March 8.
  • Gas prices have followed oil prices down. The U.S. average price of $4.08 is down 6% from $4.34 in early March, per GasBuddy.

Be smart: Base effects matter a lot when looking at year-over-year inflation numbers.

  • Right now we’re reaching the end of the period in which we’re comparing to prices that were artificially depressed by the pandemic — and we’ll soon be comparing to prices that were hitting artificial highs thanks to global supply constraints.

The other side: Any declaration that inflation has peaked is necessarily “provisional at best,” wrote RSM’s Joe Brusuelas in a research note, given the volatility and unpredictability of oil prices in a time of war.

  • If Europe stops importing oil and natural gas from Russia for any reason, that alone could send energy prices soaring again.

What’s next: The Fed is going to keep on raising rates all year. The central bank tries to ignore volatile food and energy prices, but core inflation, at 6.7%, is well above the Fed’s 2% target.

  • Higher interest rates have already started to show up in the mortgage market, where 5% mortgages are now common. That should help slow home-price inflation.

The bottom line: We may be moving from inflation being high and rising, to inflation being high and falling. That’s better, but it’s still not great.

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