Posted on 06/14/2022 5:53:11 AM PDT by blam
Inflation wasn’t transitory.
And inflation hasn’t peaked.
It’s more like peak inflation was transitory.
The May Consumer Price Index (CPI) came in higher than expected. The headline year-on-year price increase was 8.6%. The projection was for the CPI to hold steady at the same level as last month — 8.3%. Instead, we got the biggest jump in prices during this inflationary cycle and the highest CPI print since 1981.
On a month-to-month basis, the CPI rose by 1%. This was above the 0.7% projection. Another spike in fuel and energy costs primarily drove the monthly increase. Energy costs rose 3.9% during the month. Annualized, energy prices are up 34.6%. Fuel oil posted a 16.9% monthly gain, pushing the 12-month surge to 106.7%.
Stripping out more volatile food and energy prices, core CPI rose 0.6%. This equaled last month’s core CPI gain and was double the March core read of 0.3%, which was supposedly signaling peak inflation. If you annualize the last two months, the core CPI would come in at 7.2%.
Year-over-year, core CPI rose 6%. This was slightly above the 5.9% estimate.
Most analysts focus on rising energy prices as the primary driver behind persistent inflation, but prices rose in all 11 CPI categories. Nine of those 11 categories charted price increases above the 12-month average.
Housing costs continue to inch higher, even using the government’s make-believe “owner’s equivalent rent” calculation. The housing index was up another 0.6% on the month and this significantly understates the actual rise in housing costs. It was the fasted one-month gain in shelter costs since 2004. The 5.5% 12-month gain ranks as the biggest rise in housing prices since February 1991,
Americans are feeling the sting of inflation.
According to calculations by Bloomberg Economics, the inflation tax currently costs American households $433 per month. That comes to a $5,200 annual increase in household costs.
Taking into account rising prices, the average consumer took a pay cut from April to May, according to a separate BLS report.
Average hourly earnings rose 0.3%, but real wages fell 0.6%. On a year-on-year basis, real average hourly earnings decreased 3%, seasonally adjusted.
This undercuts the popular narrative that “inflation isn’t really that bad” because wages increase as well. Rising wages don’t keep up with rising prices. As a result, American consumers are running up record levels of debt and burning through savings to make ends meet.
And as bad as these numbers are, it’s actually worse than that. This CPI uses a government formula that understates the actual rise in prices. Based on the CPI formula used in the 1970s, CPI is above 17% — a historically high number.
In March, everybody was talking about peak inflation. Clearly, the CPI didn’t peak in March if it’s higher in May. And there is no reason to think these May numbers will be the peak either.
While the mainstream blames, Russia, COVID, supply chains, excessive demand, and perhaps voodoo for rising inflation, it completely ignores the most significant factor – actual inflation created by the Federal Reserve.
Remember, rising prices are not in and of themselves “inflation.” Inflation is an increase in the money supply. Rising prices are a symptom of inflation. Loose central bank monetary policy drives the money supply up.
The Federal Reserve has been flooding the economy with money — inflation — since 2009. We are drowning in inflation.
The Fed took a weak swing at inflation during its May meeting, raising interest rates by 1/2%. But at .75%, interest rates remain historically low. Meanwhile, the central bank pushed back balance sheet reduction until June. And at the proposed pace, it would take over 7 years to decrease the balance sheet back to pre-pandemic levels. The Federal Reserve hasn’t done nearly enough to mop up all of the excess liquidity in the economy.
As a SchiffGold analyst put it, “This is still highly stimulative, inflationary policy. Interest rates are being held artificially low. And we’re still dealing with all of this inflation that is in the pipeline.”
Meanwhile, President Biden’s inflation-fighting plan basically involves spending more money. That means more borrowing and more debt the Fed will ultimately need to monetize.
It should be clear to you that this won’t fix inflation. In fact, it will only make it worse by raising the inflation tax. Every dollar the government spends comes out of Americans’ pockets — out of your pocket.
If the federal government is going to spend more to fight inflation, it will either have to raise taxes (and not just on the “rich” — that won’t generate enough government revenue) or it will have to borrow more. That means the Federal Reserve will have to print more to monetize the debt. That means more inflation.
All of this tells me that peak inflation was every bit a fairytale as transitory inflation.
Where's my inflation check?(ahem)
This morning’s PPI suggests inflation has peaked.
This morning’s PPI suggests inflation has peaked
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Or, merely plateaued before the next gap up. It’s really hard to imagine any “peaking” when Biden and his climate Nazis continue to push up the price of natural gas and oil. Until the administration reverses course and, in order to make up for lost time, starts subsidizing the expedited completion of pipelines, drilling and fracking, I wouldn’t be too optimistic on any “peaking”.
One report of declining increases don’t make it go away. We will be on this cycle until Crypto goes bust and SPAC offerings go away. Have to clean out the folks who are leveraged on margins.
Market has to correct more and it won’t be over until the democrats are defeated in November and then 2024 with a new president.
Well, the previous months PPI numbers were all revised down, so last month wasn’t as high as everyone thought. And this month was slightly down from that.
This inflation is being driven by shortages in the supply chain and that supply chain is only getting worse.
I am afraid it will not be long before we would love to have inflation back down to where it is now.
Sure, the inflation rate has probably peaked - and will return to somewhere between zero and 2%. It's just that the new, high prices will become permanent.
Many people confuse the year-over-year inflation rate with a measurement of prices, and assume that if inflation goes back toward zero prices will return to their previous levels. No, that would require a significant period of disinflation. This does not seem to be on the horizon.
Well, the previous months PPI numbers were all revised down, so last month wasn’t as high as everyone thought. And this month was slightly down from that.
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The downward revisions were relatively minor and this months “lower” PPI print was just .1 % off (10.8 vs 10.9 expected). They could easily be just statistical noise. I don’t have a crystal ball, but I’m not going to get optimistic about any peak inflation argument until we tackle the real issues affecting price increases, which is fossil fuel repression (affecting 60% of the CPI) and our ballooning money supply.
I agree. What I'm saying is the PPI is upstream from the consumer (CPI). So with the slight revision down and the lack of increase from that, you might be seeing the beginning of stability given that higher prices (with the noted exception of fuel) have to come from the producer level and work their way down to the consumer.
Has Washington stopped printing money and has the government stopped spending money? I did not hear any news on those fronts.
and the RATS all whined about Peak-OIL...
What I’m saying is the PPI is upstream from the consumer (CPI). So with the slight revision down and the lack of increase from that, you might be seeing the beginning of stability given that higher prices (with the noted exception of fuel) have to come from the producer level and work their way down to the consumer.
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Yes, and like I said, I don’t have a crystal ball and this could just as easily be a plateau before continuing to rise based on the continued increases we may be seeing in fuel and money expansion.
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