ING Bank forecasts inflation will slow through 2027 for four reasons, according to a statement on May 15 (local time). The bank cited potential oil price declines if US-Iran negotiations resume, housing cost deceleration showing sub-1% year-over-year growth, labor market rebalancing from 2022's tight conditions, and fading tariff impacts on core inflation. Housing costs represent 35% of the Consumer Price Index (CPI), while the Dallas Federal Reserve estimates tariffs currently add approximately 0.9 percentage points annually to core Personal Consumption Expenditures (PCE) inflation.
ING Bank Identifies Oil Price Decline as First Inflation Factor
ING Bank stated international oil prices will fall again if negotiations between the United States and Iran resume and reach an agreement. The bank noted that while recent sharp declines in Strait of Hormuz maritime shipping volumes have created upward pressure on oil prices, West Texas Intermediate (WTI) crude futures currently trade below US gasoline prices, displaying historically stable trends.
Housing Costs Show Sub-1% Growth Across US Markets
Housing costs account for 35% of the Consumer Price Index (CPI) as the largest component. According to data from Zillow and Realtor.com, housing price year-over-year growth rates have fallen below 1%, with rental rates declining in an increasing number of regions. ING Bank stated the housing sector will apply steady downward pressure on overall inflation over the next 12 months.
Labor Market Rebalancing Eliminates Wage Bubble from 2022
ING Bank identified labor costs as the largest expense burden for US companies, noting clear issues exist surrounding semiconductor prices. The bank stated that in 2022, two job openings existed per unemployed person, but recent conditions have reached equilibrium. This development has significantly removed the wage bubble. Job turnover rates, which indicate labor market volatility, have plummeted sharply. ING Bank stated this means companies no longer need to pay high wages to retain employees.
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Dallas Fed Quantifies Tariff Impact at 0.9 Percentage Points Annually
ING Bank stated tariffs cause temporary changes in prices, but as the system transitions to a relatively relaxed tariff regime, upward pressure from tariffs on inflation will disappear rapidly. The Dallas Federal Reserve recently analyzed that tariffs affect core Personal Consumption Expenditures (PCE) inflation by approximately 0.9 percentage points annually. ING Bank stated that as this figure approaches zero, core inflation will decline sharply.
FAQ
What four reasons does ING Bank cite for inflation slowdown through 2027?
ING Bank on May 15 (local time) identified oil price declines if US-Iran negotiations resume, housing cost deceleration below 1% year-over-year growth, labor market rebalancing from 2022's two jobs per unemployed person to current equilibrium, and fading tariff impacts as core PCE inflation pressure drops from 0.9 percentage points toward zero.
How much do housing costs represent in the Consumer Price Index?
Housing costs account for 35% of the Consumer Price Index (CPI) as the largest component, according to ING Bank's May 15 statement. Zillow and Realtor.com data show housing price year-over-year growth rates below 1%, with rental rates declining in an increasing number of US regions.
