Inflation Growth: A Positive Shift for Risk Assets Like Bitcoin and Ethereum

Inflation growth is rapidly closing in on the Federal Reserve's 2% target.

One of my daily routines starts with enjoying coffee. After my espresso maker warms up, I look forward to making two lattes, each with an extra shot of espresso.

This habit changed during COVID. Previously, I would buy my coffee. However, upon returning to the office, I noticed significant price increases—first from $5 to $7.50 per cup, prompting a shift to making coffee at home.

As I resumed buying coffee, the price hadn’t budged, forcing many consumers like me to reconsider spending habits after witnessing escalating prices during the pandemic.

Later this week, the U.S. Bureau of Labor Statistics will release the September inflation metrics. Expectations suggest that price pressures have hit their lowest levels since February 2021, potentially influencing the Federal Reserve’s approach to interest rates and paving the way for a rally in risk assets such as cryptocurrency.

Every month, the Dallas, Kansas City, New York, and Philadelphia Feds survey manufacturers in their regions about new orders, lead times, employment, and production. The feedback suggests that inflation pressures are waning, with manufacturers struggling to increase prices.

The latest readings indicate a decline in prices received. As reflected in recent charts, this combined prices received index (CPRI) typically leads CPI trends, historically peaking in October 2021 prior to a rise in CPI rates.

Currently, CPRI trends are stabilizing as consumer spending slows, suggesting a potential return to inflation growth around the 2% mark. If this momentum continues, expect further confirmation reflecting easing price pressures and strategic rate cuts from the Fed.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.