Perspectives; Thoughts; Comments; Opinions; Discussions

Posts tagged ‘consumer price index’

The Fed’s Favorite Inflation Indicator Just Spiked Even Higher


By JOHN HUGH DEMASTRI, CONTRIBUTOR | September 30, 2022

Read more at https://dailycaller.com/2022/09/30/fed-favorite-inflation-measure-up/

Federal Reserve Chair Powell testifies on Capitol Hill in Washington
Graeme Jennings/Pool via REUTERS

The core index of the Federal Reserve’s preferred measure of inflation went up in August, despite a historically aggressive campaign of interest rate hikes intended to slow it.

The Personal Consumption Expenditures Price Index (PCE), which measures the value of goods and services purchased by “persons” residing in the U.S., was down slightly in August from 6.4% to 6.2% annually, but was higher than economists anticipated, according to CNBC. This decline was almost entirely off the back of falling energy prices, with so-called core PCE, which does not consider the more-volatile food and energy indices, increasing in August from 4.7% to 4.9% annually, according to the Bureau of Economic Analysis.

This new data closely mirrors the results of the more well-known Consumer Price Index (CPI), released earlier this month, which also saw core prices rise as overall inflation remained near historic highs. As inflation lingers, investors have grown increasingly concerned that the Fed’s aggressive campaign of interest rate hikes will continue unabated, prompting the Dow Jones Industrial Average to seesaw in and out of a major slump known as a bear market.

The Fed has been consistent at all levels that high interest rates will remain “until the job is done,” even at the cost of jobs or triggering a recession, as Fed Chair Jerome Powel has said multiple times. On Tuesday, Neel Kashkari, head of the Federal Reserve Bank of Minneapolis, said that the Fed would not repeat the mistakes of the 1970s by bringing down interest rates too quickly, with Vice Chair Lael Brainard echoing that sentiment in a Friday morning speech, according to CNBC.

This messaging, in conjunction with the Fed’s aggressive rate hike campaign, has led Goldman Sachs to slash its expectations for the S&P 500 stock index by about 16%, anticipating the Fed will raise rates by at least another 1.25% by the end of the year, to 4.5% from 3.25%.

Food, rent and utilities are among the critical products that the Fed anticipates will continue to face significant inflation until next year at the earliest as the Fed struggles to bring inflation back to its target of 2%.

Key Inflation Indicator Remains Sky-High In Another Worrying Sign For Businesses


By JOHN HUGH DEMASTRI, CONTRIBUTOR | September 14, 2022

Read more at https://dailycaller.com/2022/09/14/producer-costs-high-inflation/

U.S. President Joe Biden travels to Ohio
REUTERS/Joshua Roberts

The prices faced by producers rose by 8.7% year-on-year in August as inflation continues to challenge businesses, according to the Bureau of Labor Statistics (BLS).

While down from the near-record highs of 11.3% in June, the current price increases were over 4 times the typical rates — between 1 and 3% annually — seen in 2019 and 2020according to data from the Bureau of Labor Statistics’ Producer Price Index (PPI), which measures the prices suppliers charge businesses and other customers. These elevated rates mirror Tuesday’s Consumer Price Index (CPI), which pegged inflation at 8.3%, according to the BLS. (RELATED: Food Prices Hit 40-Year High, Keep Breaking Records Every Month)

A significant component of the decrease was accounted for by a 5.2% decline in energy costs, according to the BLS. Mirroring July’s results, the index for foods and all goods less food and energy rose by 0.1% and 0.2%, respectively.

The index for all products other than foods, energy and trade services rose by 5.6% year-over-year,  less than the 5.8% posted in July, according to the BLS. The price for unprocessed goods was still incredibly elevated, at 36.1%, more than July’s value of 30.4%, as a spike in the price of natural gas kept prices up.

The Biden administration has been taking a victory lap on economic conditions, with Treasury Secretary Janet Yellen claiming the economy had undergone one of the fastest recoveries in modern history. President Joe Biden claimed that the passage of the Inflation Reduction Act had helped to combat inflation “at the kitchen table,” in a Tuesday speech at the White House.

Simultaneously, the BLS’ monthly CPI report placed inflation at 8.3%, and found that food prices had increased 13.5% annually. Rent and electricity were also up, 6.7% and 15.8% respectively.

Increased rent prices have put pressure on families in particular, with the average cost of a single family rental home up about 13.4% this year, according to CNBC. At a median cost of $2,495 per month, families who might otherwise save to purchase a house are being priced out of home ownership, CNBC reported.

Gas prices also remained incredibly elevated, despite having fallen 12.2% month-on-month, and were still up 25.6% compared to the same time last year, the BLS reported.

Inflation Hits Highest Level In 39 Years


Reported by HARRY WILMERDING | CONTRIBUTOR | December 10, 2021

Read more at https://dailycaller.com/2021/12/10/inflation-consumer-price-index-joe-biden-jerome-powell-bureau-labor-statistics/

joe-biden-november-inflation
(Photo by Chip Somodevilla/Getty Images)

The Consumer Price Index (CPI) increased 0.9% in November, bringing the key inflation indicator’s year-over-year increase to 6.8%, the highest figure in four decades. The CPI’s increase is the largest increase in four decades, up from October’s 6.2% according to the U.S. Bureau of Labor Statistics (BLS) report released Friday morning. Experts surveyed by CNBC projected inflation would increase 0.7% in November, translating to a 6.7% gain on a year-over-year basis.

“These are frighteningly high inflation numbers, the likes of which we haven’t seen for decades,” Allen Sinai, chief global economist and strategist at Decision Economics, Inc., told The Wall Street Journal.

The core price index, which measures inflation of goods less food and energy, jumped 0.5% in November, a decrease from October’s 0.6% increase, according to BLS. Price increases in gasoline, shelter, food, used cars and trucks and new vehicles were among the largest contributors to the index’s jump in November, BLS said. Food prices increased 6.1% on a year-over-year basis, and energy prices soared 33.3% over the last year and 3.5% in November.

Meanwhile, the labor market continues struggle to recover from the COVID-19 pandemic, and the emerging Omicron variant has brought new concerns.

“We have tremendous spending by consumers. A lot of people are getting hired. Demand is huge. Monetary policy remains very easy and fiscal stimulus has no precedent in history,” Sinai said.

The U.S. economy added just 210,000 jobs in November, far below experts’ projections of around 573,000, but unemployment slipped to 4.2% from October’s 4.6% figure. The number of Americans who filed new unemployment claims totaled 184,000 in the week ending on Dec. 4 as employers fight to retain workers entering a busy holiday season.

“Looking past the noise, we think claims will eventually hover more consistently around pre-pandemic levels of 220k, assuming the Omicron variant of the coronavirus has only a moderate negative impact on the economy,” Nancy Vander Houten, lead economist at Oxford Economics, told the Daily Caller News Foundation.

Soaring inflation and falling unemployment have triggered Federal Reserve Chairman Jerome Powell to pivot away from pandemic era stimulus programs. Powell signaled that the central bank would wind down its bond-purchasing stimulus, which will lead to earlier-than-expected interest rate hikes.

The central bank is scheduled to meet Dec. 14-15, when a more detailed schedule is slated to be announced.

Inflation Surges To Highest Level In 30 Years


Reported by HARRY WILMERDING | CONTRIBUTOR | November 10, 2021

Read more at https://dailycaller.com/2021/11/10/inflation-consumer-price-index-bureau-labor-statistics/

US-POLITICS-NBA-BIDEN-BUCKS
(Photo by MANDEL NGAN/AFP via Getty Images)

The Consumer Price Index increased 0.9% in October, bringing the key inflation indicator’s year-over-year increase to 6.2% as supply shortages continue and demand grows, the U.S. Bureau of Labor Statistics announced Wednesday. The year-over-year inflation figure is an increase from September’s 5.3% level, marking the highest level in 30 years, according to the Bureau of Labor Statistics (BLS) report. Economists surveyed by The Wall Street Journal projected the CPI would increase to just 5.9% in October.

The core price index, which excludes volatile categories like food and energy, jumped 0.6% in October, an increase from September’s 0.2% figure, according to the BLS. 

“I do think we’re moving into a new phase where inflation is broader and where things are going to get a little more intense,” Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, told the WSJ. “Part of that reflects that [supply-chain] bottlenecks are not resolved going into the holiday season, when a lot of purchases get made, and that the economy is doing really well, so you have strong demand.”

Food prices increased 0.9%, the same increase experienced in September, while the energy index jumped 4.8%.

Additionally, the Producer Price Index (PPI), which measures inflation at the wholesale level, rose 8.6% year-over-year as of October, the BLS announced Tuesday. The Federal Reserve announced on Nov. 3 that it would begin scaling back its monthly bond purchases by $15 billion starting in November to combat growing inflation. The Fed did not say it would raise interest rates from around the current near-zero level.

Tag Cloud

%d bloggers like this: