With prices for oil and and aluminum down from their all-time highs earlier this year — and other commodities pulling back a bit as well — Tesla CEO Elon Musk thinks that inflation has likely peaked.
"If I were to guess — and I would take this with a grain of salt — I think inflation will decline towards the end of this year," Musk said on Tesla's earnings call late Wednesday. "We are certainly seeing prices of commodities trending lower."
Musk was fielding a question on if Tesla planned to lower prices should commodities retrench further. Tesla has raised prices several times this year to offset surging inflation. Musk didn't rule out price cuts but wasn't too hopeful on that coming to pass.
"If we see indications that the inflation rate is declining then we would not need to increase our car prices — it's possible that there could be a slight decrease in car prices," Musk said. "But this is fundamentally dependent on macroeconomic [conditions]. Inflation, it's not something we control."
Tesla's prices increases in a very inflationary environment haven't stunted demand.
Second quarter sales rose 43% from a year ago to $14.6 billion. Inflation did, however, clip margins — Tesla's automotive margins dropped 46 basis points from a year ago.
U.S. consumer prices in June as measured by the Consumer Price Index (CPI) accelerated at the fastest annual pace since November 1981. The June Producer Price Index (PPI), meanwhile, spiked 11.3% on surging energy costs.
Companies such as PepsiCo and Conagra have recently predicated double-digit percentage increases in inflation this year, pushing them to jack up prices further.
"I don't think it's realistic to expect inflation to decelerate back toward 2% over the course of the next three to six months," Goldman Sachs chief U.S. economist David Mericle said on Yahoo Finance Live this week. "We're still probably going to see some flow through from faster wage growth to service sector inflation. And while I think we will eventually see the end of supply chain disruptions caused some normalization of goods prices, that's not going to happen overnight, either."
