US inflation draws concerns from investors, experts

LONGER INFLATION PROSPECT

Part of the price increases reflect supply constraints and will prove to be temporary although that temporary may last a little longer than people expect, said Levy at an online panel discussion organized by the Manhattan Institute on Tuesday.

"But, at the same time, strong demand and all the monetary and fiscal stimulus point toward underlying and mounting inflation pressures that will persist," Levy said.

The United States has the highest risk of higher inflation in the medium term in comparison with the United Kingdom and European Union, according to Mervyn King, former Bank of England governor and professor of economics with New York University's Stern School of Business.

Consumer price inflation is too narrow of a measure to judge inflationary pressures within an economy, and underlying vulnerabilities are built up in the process, said investment research firm MRB Partners in a recent research note.

"The surge in US core inflation in the second quarter has defied all expectations. The possibility of inflation surprising on the upside on a 12-18 month basis will gain more traction ahead," said analysts with MRB Partners.

The underlying trend of personal consumption expenditure (PCE) inflation will be at or above 3 percent by the end of next year in comparison with the Fed's expectation of around 2 percent by then, according to MRB Partners.

MRB Partners estimated that aggregate inflation in the US economy is now running at a 9 percent annual rate, which is about twice that of the core CPI inflation and the highest reading since 1980.