Buckle Up: Inflation is Still Running Wild
In June, the CPI increased 9.1% YOY...
The Bureau of Labor Statistics released its CPI data which reflected a YOY increase of 9.1% during the month of June. In May, American consumers faced an 8.6% high. The 9.1% recording is higher than economist estimates which were set at an increase of 8.8%.
Speaking in terms of a month-to-month basis, the CPI grew at a pace of 1.3%, which is up from 1% in May and climbing exceedingly faster than the projected pace of 1.1%. This is the highest monthly increase since 2005. As the news was released, the stock market was hammered. S&P futures shed 1.5%, NASDAQ futures shed 2.1%, and the Dow futures shed 1%.
The United States economy has been continuously beaten down by inflation. Food prices are jumping, gas prices are jumping (topping more than $5/gal last month), and many more areas are being inflated more than American consumers can keep up with.
Core CPI increased by 5.9% compared to 6.0% in May. The expectation across the board was an increase of 5.7% as many expected the cooling of inflation. Energy indexes rose by 7.5% in June and over the last year, 41.6%. Food prices increased 1% and 10.4% for the year as well.
"Overall, this report confirms that the Fed will need to hike by 75bp again at the end-July meeting. While some will draw parallels with the shockingly bad May CPI report, the backdrop is markedly different - commodity prices have fallen sharply and we’ve seen clearer signs of an economic slowdown, both of which will contribute to weaker price pressures ahead."
Michael Pearce, the Capital Economics Senior U.S. Economist, said.
As many know, the White House already reported that the data wouldn’t be the prettiest. Christopher Rupkey, a Chief Economist for FWDBONDS, said, "The Administration tried to get out in front of the bad economic news, and tell us the inflation report was going to be ugly this month, but it was even worse than markets imagined in their wildest dreams."