ICYMI: Inflation is way too hot in the U.S., but even in the desert, there is shade. Oil and gas prices have come down of late as have some agricultural products like wheat. The question is whether that makes things better, or worse, says GinaChon.
. Grocery prices jumped more than 12% year-on-year, the largest jump since April 1979, the Labor Department said on Wednesday. Gas prices surged almost 60% while the rent index increased 0.8% from May, the largest monthly bump since April 1986. The chances of the Federal Reserve raising rates by 100 basis points – which would be the biggest increase since the 1980s – have risen toThe report doesn’t account for some recent relief.
But the reprieve may not last. Cheaper prices could cause Americans, who are still flush with pandemic-related stimulus cash, to spend more and drive prices higher. Airline traffic is up strongly, but flight delays and cancellations could make road trips more attractive and send Americans back to the gas pumps. PepsiCo said on Tuesday that it hasn’t seen any slowdown in demand despite raised prices for snacks and soda, with net revenue increasing more than 5% in the second quarter.
Even big-ticket items like autos – one of the purchases the Fed traditionally assumes it can influence by raising the cost of taking out loans – could be on the shopping list given the pent-up demand and improved supplies. That would move the economy one step forward and then two steps back in the inflation fight.The U.S. Consumer Price Index rose 9.1% in June year-over-year and 1.3% from May, the Labor Department said on July 13. Economists expected that measure to increase 8.
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