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Inflation hits new 40-year high as gas, food rent costs surge. Another big rate hike appears likely

Moon

Why so serious?
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Inflation jumped again in June on a persistent climb in gas, food and rent costs, notching another 40-year high and likely solidifying the Federal Reserve’s plans for another big rate hike this month.

Prices increased 9.1% from a year earlier, up from an annual rate of 8.6% the prior month and the largest gain since Novemberr 1981,the Labor Department's Consumer Price Index showed Wednesday. Economists surveyed by Bloomberg had estimated inflation would rise to 8.8%.

On a monthly basis, consumer prices increased 1.3%, compared to a 1% rise in May.

Inflation hits another 40-year high. What does that mean for shoppers and the next Fed rate hike?

Inflation touched a new 40-year high last month as gas, food, and rent costs surged. That will likely mean another big Fed rate hike this month.
www.usatoday.com

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Definitely not good news.
 
Not good at all. However, the declining gas prices and commodity prices are not fully reflected in the June report. Hopefully it continues through July and that this June report is the peak.
 
We need more immigration
 
Callen said:
Not good at all. However, the declining gas prices and commodity prices are not fully reflected in the June report. Hopefully it continues through July and that this June report is the peak.
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July will give a respite in some fuel prices, likely August as well. However September-December is going to be a series of nightmare numbers.

You are likely going to see energy prices spike again around that time and you will see more ag-commodities and housing variables drive the CPI higher.

FRB just got locked into several cycles of aggressive monetary policy. Expecting we will likely officially be in a recession by end of this month.
 

And still going to be a problem with govt still printing trillions in debt while encouraging people not to work.
 
Cope said:
What kind?
We need the kind that wants to stay here and spend here, and can fill jobs, not use up resources just to be here.
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We need desperate people willing to work any job to support their family. That’s how our system has been run for 40 years.
 
And Biden will spin it once again trying to convince us that Putin caused it.
 
It's not just how much money is out there but rather who has the money and what do they do with it. Remember inflation didn't really start until goverment stimulus went straight to the lower/middle class. Consumers buying habits will dictate when inflation end. Eventuality the excess money will work itself out of the system. But watch out for technical problems like a wage-price spiral, hording, and asset bubbles.
Also I should mention that our current administration is more focused on handouts for the lower class rather than attacking the root problem of inflation.
 
Yeah, and it's interesting that consumer spending still remains strong in spite of inflation.
 
Not good news at all. I was hoping the numbers would start turning downward. Rents I know have been an ongoing issue as they keep going up, but gas has been on a downward trend based on the stats I've seen and prices locally.
 
ElChupacabra said:
Yeah, and it's interesting that consumer spending still remains strong in spite of inflation.
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Yes. Its the greatest paradox... if people are so poor then who is doing all the spending?
 
The number is already out-of-date since it doesn’t reflect the drop in commodity prices (mostly energy and food). But, the price declines are so-recent that they are not picked up in the June data being reported on today.

What is also contributing to the high number is the surge in rent costs, which rose 0.8% in June.



What I worry about is that the Fed will overreact and raise interest rates based upon old data.
 
ElChupacabra said:
Not good news at all. I was hoping the numbers would start turning downward. Rents I know have been an ongoing issue as they keep going up, but gas has been on a downward trend based on the stats I've seen and prices locally.
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See my post (#16). The data is out of date due to recent and sharp price declines.
EDIT: Guess you saw it, since you “liked” it.
 
MTAtech said:
See my post (#16). The data is out of date due to recent and sharp price declines.
EDIT: Guess you saw it, since you “liked” it.
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Yep, saw just now.


I am concerned about rents though, especially since we've seen a surge of investors and corporations moving into real estate and putting a real squeeze on properties. What we've seen locally is a growing number of single family homes picked up by these groups then rented out at high prices.
 
dmpi said:
Yes. Its the greatest paradox... if people are so poor then who is doing all the spending?
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Middle class built up a substantial amount of savings during the pandemic. Since then, rather than being fiscally prudent and saving, they have been spending, spending, spending.
 
No, it’s not out of date. It accurately reflects the CPI for the month of June. Any changes in the CPI for July will be reflected when the July report comes out next month.
 
dmpi said:
Yes. Its the greatest paradox... if people are so poor then who is doing all the spending?
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Pent up demand was pushing spending. Also remember that unemployment is low, so consumers have money in their pockets. But new data is showing that demand is normalizing.

Remember high freight rates? They’re plunging:

And more generally, the supply chain problems that helped drive prices up have gone into reverse: Major retailers are reporting that they’re sitting on piles of excess inventory and are set to slash prices in an attempt to get stuff off shelves and out of their warehouses.
 
phoenix2020 said:
Middle class built up a substantial amount of savings during the pandemic. Since then, rather than being fiscally prudent and saving, they have been spending, spending, spending.
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Yes, the highest price increases are travel/vacation related like airfare, hotel rooms, rental cars, etc.
 
That was a rough report, even worse than expectations - which were already rough.
 
gbg3 said:
That was a rough report, even worse than expectations - which were already rough.
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Yeah, it was. I thought I saw the expectation was 8.8%, but I could be wrong.
 
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