The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in June, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The June level of 208.352 (1982-84=100) was 2.7 percent higher than in June 2006.
There are a couple of interesting points in this report.
1.) For those of you who consume food and energy, those prices are up Y/Y on an unadjusted basis of 4.1% and 4.6%, respectively.
As CBS Marketwatch noted:
Energy prices fell 0.5% in June after surging the previous three months at an annual rate of more than 70%. In June, gasoline prices fell 1.1% and natural gas prices fell 0.1%.
Gasoline prices have inched higher in recent weeks, however.
Food prices continued to climb, rising 0.5% in the month. Dairy prices rose 3.2%, and poultry prices rose 2.1%, on higher prices for corn as a feed for poultry and livestock. Fresh fruit and vegetable prices fell.
Food prices are up at an annual rate of 5.1% in the past three months, driven higher by adverse weather, strong global demand and the diversion of much of the corn crop and the nation's arable land into the production of ethanol for fuel.
2.) From the BLS report:
Consumer prices increased at a seasonally adjusted annual rate (SAAR) of 5.2 percent in the second quarter after advancing at a 4.7 percent rate in the first three months of 2007. This brings the year-to-date annual rate to 5.0 percent and compares with an increase of 2.5 percent in all of 2006.
Those are not happy numbers for the Fed.
3.) The unadjusted 12-month core rate of change is 2.2% which is still above the Fed's comfort zone of 1% to 2%.
2 comments:
Makes me even more glad that I sold my car last year.
How much longer do you think that the Fed and the media can stick their head in the sand and ignore the inflation problem?
For the last 4 months, YoY inflation has stabilized between 2.6%-2.8%. That's the good news.
The bad news is that the 6-month rate of inflation (which is admittedly seasonal) is nevertheless at the highest reading in over 16 years, at 3.2%
At the same time, the yield curve has partially re-inverted, but at a higher interest rate level than last year.
Put the two together, and you have an uptick in inflation and interest rates, and more weakness ahead in the economy.
Not to worry, the DJIA is ahead about 35% YoY. No sign of a blowoff there.
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