Inflation related to supply chain difficulties and consumer demand eased significantly in July.
Supply constraints continue to ease, and spending appears to be shifting from goods to services, allowing businesses to replenish without high demand. While inflation pressure is receding in those areas, the tight labor market posted more openings than unemployed, spurred by upward wage pressure from employers competing for workers. A higher wage market may support increased consumption but may also drive higher prices to consumers.
The Delta variant continues to pose the risk of setting back supply chains once again and sending consumers back to purchasing goods at home instead of services.