US Inflation Hits Three-Year High as Energy Prices Surge

**Leanna Byrne** (0:01)
What's driving prices up in the US? It's World Business Express from the BBC World Service. I'm Leanna Byrne. One of the world's biggest chipmakers says it's doing its best to keep up with demand, and World Cup tickets are already reselling. Who's going to buy them?
The cost of goods is rising at its highest level in three years in the world's largest economy. Inflation in the US is driven largely by soaring energy prices, which have ramped up since the start of the war in Iran. Our North America business correspondent, Samira Hussain, has taken a look at the numbers. Samira, what are you seeing?

**Samira Hussain** (0:39)
It really has everything to do with the high cost of energy. The closing of the Strait of Hormuz has cut off about a fifth of the world's global energy supplies. And while the United States doesn't get any of their energy from that strait, what it has done on the global markets has really pushed up the costs. And so for everyday Americans, gasoline is much higher, the price of food as a consequence has also gotten much higher. And just in general, all prices are higher. Now, you might be thinking, well, everybody has jobs. We saw this really good jobs report just the other week. But the problem is, is you look at the wages and how fast those are going up. They're not going up in line with inflation. So yes, people are employed, but they're finding it harder and harder to make ends meet.

**Leanna Byrne** (1:27)
Now, Samira, the Federal Reserve is supposed to be meeting in a few days. It's Kevin Warsh's first appearance as a Fed chair. What does that mean for him?

**Samira Hussain** (1:34)
Well, it's certainly going to complicate decision-making when it comes to making any kinds of changes to the interest rates. Now, this particular CPI data is not exactly what the Fed looks at. It looks at a different kind of measure. Even by those other kinds of measures, inflation is still well above the 2% target rate that they're looking for. So I think we're looking at the fact that there's not going to be a cut to interest rates anytime soon. And there are some that are even wondering whether we will see an increase to interest rates.

**Leanna Byrne** (2:06)
All right, Samira Hussain, always a pleasure. Thanks so much for joining us. With me now, Ross Mould, Investment Director at AJ Bell. Now, Ross, when inflation climbs, normally you would be upping interest rates, wouldn't you?

**Ross Mould** (2:17)
You would, but it isn't what President Trump wants. He continues to call for lower interest rates, which gives new Fed Chair Kevin Warsh a dilemma. Unemployment is low. Inflation is above target and running hot. And even the American stock market is looking pretty bouncy, so that doesn't need any help either.
So that's why markets are actually putting in a near 70% chance on an interest rate increase by the end of the year, despite the president's calls for cheaper money.

**Leanna Byrne** (2:40)
And just a quick reminder, Kevin Warsh wanted to reduce interest rates, didn't he?

**Ross Mould** (2:44)
He does, that he's correct. That's probably one of the reasons why President Trump appointed him.

**Sirin Janet Tawari** (2:47)
There you go.

**Leanna Byrne** (2:47)
All right, Ross Mould, you stay right there.
Taiwan's TSMC is one of the world's most important shipmakers sitting at the center of the AI boom and the growing tech rivalry between US and China. And in an exclusive interview, our Asia business correspondent, Sirin Janet Tawari, has been speaking to the company's Chief Financial Officer, Wendell Huang, about whether it can keep up with demand.

**Wendell Huang** (3:10)
We're doing everything we can, wherever we can and however we can.
We're expanding not just in Taiwan, but also in the US, in Japan, and in Germany, trying to expand the capacity and meet the customer's demand. We're trying to catch up with the demand. So far, still trying.

**Sirin Janet Tawari** (3:31)
Obviously, you're getting orders, but is there any chance that this whole AI system, this move to the technology, is a bubble?

**Wendell Huang** (3:43)
Our conviction in this AI megatrend is very strong. We talk to the customers and also the customer's customers, who are mainly the hyperscalers.
And these companies are financially very strong, with a lot of financial resources. So we believe that they are able to continue to invest. That's why we are saying this, this is the multi-year structural demand, a megatrend.

**Sirin Janet Tawari** (4:13)
The US has pushed TSMC to invest 100 billion dollars in American fabs, and the US. Commerce Secretary wants 40 percent of Taiwan's chip production moved to America. Is that a realistic ask?