United States Inflation Update

Written by Philip Rich, Chief Investment Officer,  July 13, 2022.

The “all items” Consumer Price Index hit yet another high in June at 9.1% (YOY). Food and energy remain the key drivers of inflation, but virtually all the major categories contributed to the results. Gasoline was up almost 60% YOY, and natural gas was up 38.4%. New vehicles were up 11.7%, and shelter was up 5.6%. The US continues to experience the worst inflation in decades. This report will only encourage the Federal Reserve to continue on its present course toward higher rates and tighter financial conditions. It is reasonable to expect another 0.75% increase from the Fed later this month, and a full 1% may not be out of the question. The rate of increase in “core” CPI (less food and energy) appears to be decelerating slightly, and many commodity prices have recently broken sharply to the downside from very elevated levels. But we are searching for the silver lining in this dark cloud, and it will take some time before lower commodity prices provide a break in broad inflation measures.
 

US inflation running rampant at 9.1% in June.

• Energy up 41.6% (YOY), gasoline up 59.9%
• ​Food up 10.4%, groceries up 12.2%
• Core inflation (less food & energy) rate down slightly to 5.9%
• Report supports continued Fed tightening through rate increases and reduced bond purchases