Inflation: Consumer Prices Rising To 5.4 Percent Over Twelve Months

CITY OF WASHINGTON (July 13, 2021)—In June, the Consumer Price Index (CPI) for All Urban Consumers rose 0.9 percent on a seasonally adjusted basis; rising 5.4 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.9 percent in June (SA); up 4.5 percent over the year (NSA).

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Higher Prices Impact Consumers:

When the CPI is rising it means that consumer prices are also rising and inflation kicks in against families, communities and States.  In short, a higher CPI indicates higher inflation, while a falling CPI indicates lower inflation, or even deflation.

Gas, food, services, clothing are all up and costing more for consumers to live.

With inflation, from the Fed “we are told the story is transitory but the increases are going faster and for longer,” John Ryding, chief economic advisor at Brean Capital said on Bloomberg Television. “We just had a monthly increase that was about double what was expected.”

Federal Chair Jerome Powell had this to say about  “Bottlenecks, hiring difficulties and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect,” Powell said after the June Federal Open Market Committee meeting.

Inflation vs. Deflation

Barry Ritholtz of Ritholtz Wealth Management points out that from 1997 to 2017, health care and college were the biggest outliers in inflation, as reported in Market Watch. Meanwhile, technology, clothes, cars and TVs showed deflation in prices.

Prices on the Rise

Housing prices have seen consistently high growth since the recession, leading many economists to argue that the Federal Reserve should remove housing from the “core” inflation rate. These economists want to wait to increase interest rates higher until the unemployment rate sinks lower, as reported in CNN Business.

JP Morgan and Goldman Sachs Earnings Increased 

JP Morgan and Goldman Sachs earnings increased while the CPI increased–leading to higher prices for the USA’s consumer.  

“The Dow Jones hovered around its recent peak and both the S&P 500 and Nasdaq hit new records on Tuesday as the second-quarter earnings season kicked off on a positive note, with Goldman Sachs, JPMorgan Chase and PepsiCo easily beating market expectations. S&P 500 earnings are estimated to have surged 65.8% from levels depleted by the pandemic a year ago, which would mark a second-straight quarter of sharp profit increases, according to Refinitiv. At the same time, investors digested a larger-than-expected increase in US consumer prices. The headline inflation hit 5.4% in June, the highest level since August 2008 and above market expectations of 4.9%, due to supply constraints and a rebound in costs of travel-related services. The Fed has been reiterating that a spike in CPI is likely to be temporary but investors worry that inflationary pressure could lead to sooner than expected policy tightening.”

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Source: Bureau of Labor Statistics and Trading Economics contributed to the article.

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