Is Inflation Peaking in June?

 

The recent bump in mortgage rates should help bring the housing market back to equilibrium and the drop in COVID-19 cases will help more workers return to the labor force. These developments will shift the economy back towards its pre-pandemic mix of goods and services, which will moderate the pace of goods price inflation. But if these developments are not sufficient to convince the market to see inflation peaking in June, we should look elsewhere for a reliable indicator of a slowing economy.

Consumer price index rises 0.8% in May

The Consumer Price Index for All Urban Consumption rose 0.6 percent in May, up from April's 0.8 percent increase. Over the last twelve months, the index increased 5.0 percent, the biggest increase since August 2008, when the index rose 5.4%. The most recent report showed that energy prices, which include gasoline and electricity, pushed up the CPI more than any other category. The index for shelter also increased slightly, indicating that the cost of living is rising more rapidly than the cost of food.

The overall CPI for all urban consumers rose 5.2 percent in the past year, according to the U.S. Labor Department. On a monthly basis, the chained CPI increased 0.8%. The data is subject to revisions, so the exact number may be different. Regardless, the recent increase is a good sign that the U.S. economy is working through some supply constraints, as the country reopens and rebalances.

Core CPI rises 9.1%

The latest data on consumer prices indicate that the UK is in the midst of an economic recovery. In June, the core CPI rose by 0.7 percent, bringing the overall inflation rate to 6.2 percent, a new high. The core CPI is the more important measure of inflation, because it helps determine the Fed's key interest rate. Fuel prices in the UK rose 20.3%, while food prices rose 0.2%.

The Bureau of Labor Statistics (BLS) releases its consumer price index monthly. The data are broken down by metropolitan area and by region. The BLS releases data for four regions and 23 metro areas each month. Core CPI is often referred to by economists because it excludes food and energy prices. The June report was a big disappointment for many, but the overall trend is still positive. Core CPI is a good indicator for investors and analysts alike.

Food prices increase 0.5%

While prices in June declined slightly, food costs increased by 0.7 percent in July. Overall, Americans paid an average of 4.1% more for food this year compared to June last year. The cost of meat, dairy products, and produce has been increasing for two years. According to the U.S. Chamber of Commerce, it's hard to tell when the Fed will increase interest rates again, but higher energy costs are a big reason overall prices were not higher in June.

This increase was driven by several factors. While prices in general increased, many consumers stayed home and cooked at home. There was a shortage of fresh produce and many large meat packers had closed. The result was a critical shortage of meat in the country. Eggs, poultry, and cereals were the most expensive items, with some jumping as much as 21.1%. Meanwhile, dairy products remained the same or declined slightly.

Energy prices increase 0.5%

There are a number of reasons why energy prices are increasing this month. First of all, there are new government policies that protect consumers. These measures were introduced on 31 March. They will remain in place until 2023. In addition, many utilities are adjusting default service prices. If you want to know exactly what your bills will be, you can use "Price to Compare".

Meanwhile, food and energy prices are also increasing, and the core CPI rose by 0.1% in July. Higher energy prices led the increase in July. Prices of meat, poultry, fish, eggs, and hotel stays increased the most. The increase in these items was partly due to the reversal in hotel prices. Rent and owners' equivalent rent also pushed core prices higher. During the past three months, the overall CPI has increased by 0.1%, which is more than double the rate in June.

Housing prices increase 0.5%

China's new home price growth slowed down in June, after accelerating in May. Tighter credit conditions and existing curbs on home buying dampened the gains. Still, the average price of new homes rose 0.5% in June, down from a 0.6% increase in May. Although rising housing costs may be causing buyers to delay purchases, this trend remains encouraging. China's economic growth has remained stable this year, and more cities may implement a pricing reference for resale homes.

The increase in housing costs has been contributing to the largest increase in inflation since 2008. But the rapid rise in home prices may have been misdiagnosed by government statisticians. In June, the cost of shelter rose 0.5%, a small increase compared with last year, while the cost of hotels rose 1.7%. Inflationary data often heavily weigh housing costs, so the rise in house prices may not be reflected in these figures.