Inflation Hits 9.1%… 24 July 2022

      Inflation Hits 9.1 Percent in June, New 40-Year High
  By Andrew Moran July 13, 2022 Updated: July 13, 2022
	
	 The U.S. annual inflation rate climbed to 9.1 percent in June,
  reaching its highest level since November 1981 and topping the market
  estimate of 8.8 percent and May’s annual rate of 8.6 percent.
	According to the Bureau of Labor Statistics (BLS), the consumer
  price index (CPI) rose by 1.3 percent month-over-month. The monthly
  inflation also was higher than economists’ expectations of 1.1 per-
  cent.
	While the core inflation rate, which removes the volatile food and
  energy sectors, eased to 5.9 percent, that was higher than the fore-
  cast of 5.7 percent. On a monthly basis, core inflation rose at a
  higher than-expected pace of 0.7 percent.
	Food prices soared by 10.4 percent, while the energy index advanced
  by 41.6 percent.
 	Nearly every food item, except uncooked beef steak, was more ex-
  pensive last month. Pork surged by 9 percent, chicken soared by 18.6
  percent, and ham increased by 9.6 percent. Eggs spiked by 33.1 per-
  cent, milk rose by 16.4 percent, fruits and vegetables jumped by 8.1
  percent, and coffee swelled by 15.8 percent.
	On the energy front, fuel oil increased by 98.5 percent. Gasoline
  surged by 59.9 percent, electricity costs picked up by 13.7 percent,
  and propane and kerosene jumped by 26.1 percent.
	New vehicles surged by 11.4 percent, used cars and trucks jumped
  by 7.1 percent, apparel increased by 5.2 percent, and shelter climbed
  by 5.6 percent.
	Shelter costs, which make up about one-third of the CPI, increased
  by 0.6 percent in June from May. This was mainly driven by a 0.8 per-
  cent rise in rent of primary residence, the greatest rent increase
  since 1986.
	“Today’s shockingly high consumer price inflation number does not
  bode well for our country’s economic outlook,” Desmond Lachman, econ-
  omist and senior fellow at the American Enterprise Institute, told
  The Epoch Times in an email.
	It makes it likely that the Fed will keep raising interest rates
  and decreasing its “bloated balance sheet” aggressively, he said.
	“The Fed will likely do so despite the growing signs of economic
  and financial market weakness both at home and abroad,” Lachman said.
  “That has to raise the risk of a hard economic landing before yearend
  and further turmoil in the equity and bond markets.”
	The S&P 500 ended 0.4 percent lower, its fourth consecutive drop,
  after tumbling as much as 1.6 percent earlier. The Dow Jones Indus-
  trial Average fell 0.7 percent, while the Nasdaq Composite ended
  down 0.2 percent, erasing nearly all of an early 2.1 percent loss.
	The U.S. Dollar Index (DXY), which measures the greenback against
  a basket of currencies, spiked with the news before ending the day
  lower by 0.13 percent to 108.02. The index has been on a tear in 2022,
  rallying about 13 percent year-to-date.
	A fake CPI report circulated online on July 12 and attempted to
  emulate the formatting of the May inflation data, using different
  dates and figures. It claimed that the annual inflation rate was 10.2
  percent in June. Despite being a forgery, it caught the attention of
  investors sending stocks slightly lower in the afternoon session on
  Wall Street.
	The White House braced the American people on July 12 for an ele-
  vated headline reading, noting in a memo that the June CPI report was
  out of date since it didn’t contain the dramatic decline in food and
  energy prices. U.S. officials are ostensibly looking ahead to the
  July inflation numbers to show that their efforts are succeeding.

	Peak Inflation?
	Over the past month, crude oil and gasoline prices have fallen by
  notable levels amid growing recession fears and weaker demand out-
  looks.
	West Texas Intermediate (WTI) crude has slumped by about 17 per-
  cent to below $100 per barrel on the New York Mercantile Exchange
  since the middle of July. The national average for a gallon of gaso-
  line tumbled by roughly 7 percent to about $4.65, according to AAA.
	Agricultural commodities have also plummeted, with corn, wheat,
  and soybeans down by approximately 20 percent in the past month.
	“The softening food, energy, and commodity prices, the improved
  supply chains, the easing shipping costs, and lower purchasing mana-
  ger indices hint that U.S. inflation may have hit a peak last month,
  of will hit one soon,” Ipek Ozkardeskaya, a senior analyst at Swiss-
  quote Bank, wrote in a research note.
	Even if inflation has peaked, market experts believe prices for
  many goods and services in the marketplace will remain elevated, such
  as rent and airline fares. Core CPI could moderate, too, because of
  weaker used car prices.
	The headline inflation reading prompted the interest-rate futures
  market to revise its expectations that the Federal Reserve will raise
  rates by 100 basis points at this month’s Federal Open Market Com-
  mittee (FOMC) policy meeting. Most of the market had anticipated a
  three-quarter-point increase at the upcoming rate-setting committee
  meeting, with small odds of a full point hike, according to the CME
  FedWatch Tool.
	Price stability has become the central bank’s primary objective,
  even if it triggers a recession and extends the selloff in the finan-
  cial markets. Fed Chair Jerome Powell has stated that it’s possible
  to navigate a soft landing, but noted that it isn’t a guarantee.
	Bryce Doty, senior vice president and senior portfolio manager at
  Sit Investment Associates, says the Fed’s actions will exacerbate pro-
  blems in the economy.
	“The Fed’s clear mistake of destroying demand by aggressively
  raising rates instead of supporting businesses desperately in need of
  workers will further extend shortages,” he wrote in a July12 research
  note. “Just think of the incredible growth we would have if another 2
  to 4 million workers re-entered the workforce. Supply shortages would
  dry up and inflation pressures would dissipate. Instead, the Fed’s
  actions will slow growth and inflation will persist longer than it
  should.”
	However, Deutsche Bank analysts believe that the U.S. central bank
  needs to maintain its hawkish attitude as inflation continues to show
  that it’s “a demand-driven phenomenon.” In the past couple of months,
  consumer demand has eased. Personal spending rose by just 0.2 percent
  in May, according to the Bureau of Economic Analysis. Retail sales
  unexpectedly fell by 0.3 percent in May, the Census Bureau reported.
	At the same time, with near-term recession fears growing, the
  financial institution expects the peak fed funds rate will be 4.1
  percent, but economic downturn concerns “could well short-circuit
  the Fed’s hiking cycle before it reaches our current terminal rate
  expectations.”
	Following the June FOMC meeting, the Fed updated its dot-plot from
  March, projecting that the benchmark rate would hit 3.4 percent this
  year, 3.8 percent in 2023, and drop back to 3.4 percent in 2024 (pdf).
	“My expectation is that inflation will soon peak,” Lachman said.
  “It will do so as a result of the U.S. and world economy moving into
  a recession, as well as a result of the slump presently underway in
  international commodity prices in general and oil prices in partic-
  ular.”
	Next on the inflation front, the BLS will release the June producer
  price index on July 14. Economists forecast that it will come in at
  10.7 percent year-over-year, down from 10.8 percent in May.
      Andrew Moran

	This would be a mixed bag considering that Biden is propping up
  the market with our strategic Petroleum Reserves and rampant buying 
  of US securities and bonds with unsupported money.
    God still has his plan for our nation.
  Conservatively,
  John