source: tradingeconomics.com
Inflation in the US is taking off rapidly and is evident in everything from commodity price rises to the official inflation measures from the US Government (Bureau of labor Statistics). The latest US Producer price Index (PPI), a gauge of wholesale prices in the US, has just been released (13 May) and shows a rise of 0.6% in April, which was twice as fast as economists had predicted. https://www.bls.gov/ppi/
This surge in the PPI now brings the annual wholesale price inflation rate for the year to April to 6.2%, from 4.2% a month earlier, and is the highest PPI rate since 2009 (when the current version of the PPI was introduced). Within the PPI surge, prices of services, wholesale prices for food, partly finished goods all rose in April, and raw material costs are noticeably higher than last year. A day previously (Wednesday 12 May) the US Government announced that the Consumer Price Index (CPI) rose 0.8% month-on-month for April (versus 0.2% expected), and that the CPI rose to 4.2 per cent for the 12 months to end of April, up from 2.6% at the end of the March. This 4.2% rise is the biggest consumer price inflation rise since September 2008 and reflects higher consumer prices across most items measured. https://www.bls.gov/cpi/ With commodity prices rising steeply across the board, and producers needing to pass costs on to consumers, it looks like official US inflation data can’t hide the inflation truths any longer, despite BLS calculations being famous for minimizing reported inflation. The Federal Reserve says that this inflation is transitory, as the US economy rebounds from 2020, but the Fed would say that, as they may need to, but cannot practically, raise interest rates, and are now boxed in. Higher inflation also worries stocks markets, makes real interest rates more negative, and is positive for the gold price. Inflation statistics will be important to watch over the rest of this year, and don't be surprised to see inflation headlines crop up with increasing frequency in the media throughout the rest of 2021.
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