US inflation remains sticky in July; 2nd-quarter GDP unrevised at 1.5%
By Sophie Naimi ·
The persistent ache in the American consumer’s wallet—the stubborn 3.7% annual rise in core PCE—is not a routine economic hiccup; it is the sound of global resource dependency screaming.
Core prices are rising because global chokepoints are failing
The persistent ache in the American consumer’s wallet—the stubborn 3.7% annual rise in core PCE—is not a routine economic hiccup; it is the sound of global resource dependency screaming. While markets, fixated on the next rate hike from Kevin Warsh at Jackson Hole, treat inflation as a mere statistical deviation to be tamed by interest rates, they ignore the physics of the problem: cost-push inflation rooted in conflict and structural vulnerability. The Federal Reserve’s 2% target is not an economic goal; it is a political fiction designed to obscure who bears the burden when global supply lines fracture.
When geopolitical risk dictates your grocery bill
The data confirms what has been painfully obvious for years: high inflation persists even as growth slows, dipping to 1.5% in Q2, according to reports cited by Anadolu Agency. The core PCE rose a steady 3.3% annually, according to CNBC’s reporting on the Commerce Department figures. This isn't simply demand-side overheating; this is inflation being driven by essential inputs that no central bank can control.
The recent instability in the Strait of Hormuz—the very crisis highlighted by Asharq Al-Awsat and Yonhap—is the perfect, brutal illustration. The geopolitical shocks related to Iran’s activities are not temporary bumps on the road; they are structural breaks. When vital waterways become flashpoints, the cost of energy and goods skyrockets, creating an inflationary inertia that clings stubbornly to service sectors, evidenced by the 0.3% rise in services prices reported by CNBC.
The ghost of the Oil Crisis haunts today’s inflation
We are not witnessing an isolated market fluctuation; we are living through a recurrence of historical patterns. This current episode mirrors the devastating economic shock pattern known as the Oil Crisis. Just as the 1973 and 1979 shocks demonstrated, when geopolitical supply shocks hit non-negotiable inputs—be it oil or vital shipping lanes like Hormuz—cost-push inflation inevitably bleeds into every sector, especially services, regardless of how much money circulates in the domestic economy.
The prevailing narrative—that a rate hike or cut will solve this—is dangerously naïve. Central banks are fundamentally incapable of pricing in global instability. They treat the price of oil and shipping lanes as if they were predictable variables on a spreadsheet, rather than volatile points where human conflict intersects with planetary necessity. The market’s focus on Treasury yields hitting 2007 highs merely distracts from the core truth: inflation is now fundamentally an issue of resource justice and geopolitical risk management.
The only way to break this inflationary cycle—and truly stabilize economies for the working person—is to decouple essential infrastructure and energy needs from volatile global chokepoints. Until European policy shifts its focus entirely away from maximizing shareholder profit in fossil fuel transit, and towards radical investment in localized, decentralized, and renewable grids that bypass these geopolitical flashpoints, every single inflation gauge will continue to lie about the true cost of doing business on a burning planet.
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US consumer price index. Source: Federal Reserve Economic Data (FRED).