Inflation Grows in June as Consumer Price Index Jumps 5.4% From a Year Ago
“Demand is coming back very rapidly, and businesses are normalizing prices in the sense that they are making up for declines…”
Inflation continues to grow as the economy opens up. June’s consumer price index (CPI) hit 0.9% after going up 0.6% in May.
The CPI from June 2020 to July 2021 went up 5.4%, which is the largest increase in a 12-month period since August 2008.
The CPI “measures a basket of goods as well as energy and housing costs.” In other words, it encompasses everything. All goods.
The CPI not counting food and energy increased by 4.5% in that same time period.
The numbers we should look at do not count food and energy. I know I mention that in every post, but it is important. Food and energy are too fluid to count.
Used cars and trucks, new cars, airline fares, and apparel increased in June. Medical care declined.
- Used cars and trucks: 10.5% increase from May, which is the largest increase ever since the government started tracking the index.
- New vehicles: 2% increase from May. Largest one-month increase since May 1981
- Airline fares: 2.7% increase from May
- Apparel: 0.7% increase from May
The healthcare index is important because healthcare and housing prices have skyrocketed in the last 20 years.
The index decreased again:
The medical care index declined 0.1 percent in June, as it did in May. Medical care component indexes were mixed. The index for prescription drugs declined 0.2 percent in June after falling 0.3 percent in May. The hospital services index increased 0.2 percent, while the physicians’ services index rose 0.3 percent in June.
Higher prices mean more demand, but also supply shortages and higher shipping costs:
Consumers are seeing prices rise for numerous reasons, as the U.S. economic recovery picks up. Richard F. Moody, chief economist at Regions Financial Corp., said the main driver of June inflation was booming demand that outpaced the ability of businesses to keep up. Another factor, he said, was the recovery in prices for air travel, hotels, rental cars, entertainment and recreation—all services hit hard by the Covid-19 pandemic.
“Demand is coming back very rapidly, and businesses are normalizing prices in the sense that they are making up for declines” earlier in the pandemic, he said.
Supply shortages and higher shipping costs also continue to drive rapid increases in goods inflation. Prices of goods, excluding food and energy, saw the two biggest monthly increases on record in April and May, Mr. Moody said.
Rising prices reflect robust consumer demand boosted by widespread vaccinations, the ending of many business restrictions, trillions of dollars in federal pandemic relief and ample household savings. Stronger demand also has pushed employers to seek more workers and pay higher wages, as they struggle to hire.
I wonder if higher prices will force people to give up the government dough and get a job. We’ve seen unemployment rolls go down in states that decided to end the COVID federal funds. I cannot imagine people can afford these high prices with those checks.
The economy has plenty of jobs. It’s time to get back to work and spend! Remember, the consumers drive the market and economy.
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Comments
Meanwhile, wages are stagnant and stuck 20+ years in the past.
But we saved $.16 on a meal, so we have that going for us.
Orange man bad…
Orange man isn’t office, this all belongs to the communist pedophile that currently occupies that office.
“The numbers we should look at do not count food and energy. I know I mention that in every post, but it is important. Food and energy are too fluid to count.”
Don’t care. We consume them. Not counting them means you’re using the CPI as a cudgel for political blame. That’s a valid use, but then who measures what it actually takes for Americans to live day to day?
Henry,
BLS data includes food and energy. It isn’t hidden. It just isn’t included with core CPI.
IMO, people don’t really look to the headline CPI number to tell them about price. They can see that in the grocery and at the pump or buying back to school clothes ECT.
That may be true, but I am seeing 20% to 400% increases for the things I need.
How long before the calls for the government to do something?? that something will be Modern Monetary theory and if you think it’s bad now wait.
CPI does not include food or energy, which are much higher than 5.4%
Fact is, energy costs are an important driver of the cost of much of what we purchase. Diesel is up over 20% since Biden was inaugurated and that’s a function of supply being constrained while demand is up. Plus, the country has been flooded with unprecedented monetary and fiscal “stimulus” so we are drowning in a sea of fake money. So count me among those who are skeptical that Jerome Powell, Janet Yellen and Obama’s puppet in the White House have a grasp of what is actually going on and what can be expected.
Gas is up at least 50% in the last 6 months.
Great welfare program for the oil and gas companies. Not so good for consumers. Exxon will have one of its best years in history.
Petroleum product are essential to thousands of products and you can expect a whole range of products will now go up further. Also, delivery services that use transportation will also go up. It’s like a snowball rolling down hill. It will get bigger. Expect an economic disaster by December.
Treasury secretary Yellen has a PhD in economics. But she bought into the woke bullshit that the U.S. could just print money. Her approach was sort of like denying the laws of physics.
Thought it is not included in the CPI, energy prices are rapidly rising. So to conceal that fact and the fact that the economy is in free-fall, any day now I expect to hear the Communists start their usual demagoguery about “greedy oil companies and their record profits” and how Republicans are actually to blame.
So what if food and energy aren’t included in the core CPI number. I plan on charging my electric skateboard with solar panels and feasting on this year’s cicada bounty. Plus, I grow my own hamburgers in petri dishes in my garage.
Inflation, shminflation! What do I care?
“Chuck Schumer, the Democrats’ leader in the Senate, just announced that Democrats have united behind a $3.5 trillion “infrastructure” spending package, which they can now pass using special budget rules allowing them to circumvent the filibuster.”
Combine with the less than transitory inflation and watch the fireworks.
When you consider this fully from the economic standpoint, everyone just underwent a 5.4% tax on their savings (if kept in USD).