Bloomberg Surveillance · Thursday, July 23, 2026
Julia Coronado notes that inflation is facing multiple upward pressures from oil prices, AI build-out, and tariffs. While the US economy and labor market remain resilient, the Fed will focus on core PCE inflation, which shows broadening pressures beyond energy and food, and is now at risk from rising shipping costs.
“Well, it certainly brings another round of inflation pressures on top of several layers that we've already gotten from the earlier phases of the war, from the AI build out, from tariffs, there's just layer upon layer now of upward pressure on inflation.”
“And yes, this is also a demand shock in the sense that those higher prices are going to hurt consumer purchasing power. But at least so far, the labor market's holding up, the US economy is holding up, and so the FED is really going to need to focus on the inflation side of the mandate.”
“So I think the underlying story is pretty well described by the trajectory of core PCEE inflation. That's been the Fed's preferred metric. They may revisit that, but if we look at the details, they do make sense. There is a broadening in core inflation pressures. So it's not just an oil story or a food story. It is really a story of again several layers of supply shocks that are rippling through airfares, They're rippling through software prices, They're rippling still through core goods prices.”