Shopping cart

Protoday247 is a web portal that believes to be available 24/7 for those who seek for innovations and perfection. It is a brilliant web portal.

  • Home
  • United States
  • Here’s what the red-hot CPI data has to offer in terms of inflation!
Government

Here’s what the red-hot CPI data has to offer in terms of inflation!

September 21, 20223 Mins Read
43

Here’s what the red-hot CPI data has to offer in terms of inflation! “Peace be with you,” the telegram said.

The unexpected spike in consumer prices in May deflated the Biden administration’s optimism that inflation would subside in the following months and placed pressure on the Federal Reserve to raise interest rates faster.

These are some of the key implications from the government’s announcement on Friday that the Consumer Price Index, a highly watched gauge of what Americans spend for goods and services, climbed at an annual rate of 8.6% in May, the quickest rate in four decades and more than experts expected.

The rise in the CPI was broad-based, led by higher housing, fuel, and food costs, providing little solace to those who had predicted that inflation would start to drop.

“We expect inflation to moderate in the months ahead,” a White House official told reporters on Thursday, citing more labour force participation, fewer job opportunities, and slower pay growth as reasons. “The sum of recent economic data suggests that our economy is on the verge of making that change.”

For the time being, ignore peak inflation.
Economists had predicted that inflation would decline this month, with some even forecasting that it had peaked. However, there was little sign of a slowdown, as the 8.6% annualised increase in prices was considerably above April’s 8.3% and the 8.2% predicted by economists, as well as a pandemic high. From April to May, prices increased by a seasonally adjusted 1%.

Marc Goldwein, senior vice president and senior policy director of the Committee for a Responsible Federal Budget, remarked, “We actually had a lot of demand-driven inflation in 2021.” “Now we’re seeing supply shocks placed on top of that, mostly from Russia’s invasion of Ukraine and the international response.”

Core inflation, which excludes volatile food and energy costs and is used by economists to forecast future trends, climbed by 0.6 percent in March, the same as in February.

“Looking at core inflation is useful… “Not because it tells you what inflation actually is, but because it eliminates the volatile components, it’s a better prediction of what inflation may be next month or the month after that,” Goldwein explained.

However, rising food and fuel prices are the largest electoral issue for President Joe Biden and the Democrats this election year, explaining why consumer morale is so low amid an otherwise solid economy.

“It’s a huge pain for consumers who have to fill up their car every day or travel to the grocery every day to purchase food,” said Rubeela Farooqi, High Frequency Economics’ senior U.S. economist. “Those at the lower end of the income range who have already burned through fiscal support and who are perhaps not looking at the buffer from savings that middle-income or high-income households are looking at,” says the report.

On Friday, a gallon of petrol cost $4.99 on average. The average price of a dozen eggs has risen to $2.86, while the average price of a gallon of milk has risen to $4.20, a new high.

“The changes we’re witnessing right now are substantial,” Julia Pollak, chief economist at ZipRecruiter, said of “staples.” “That’s a major problem,” she says, “particularly when your earnings are restricted and you’re living month to paycheck with little wiggle space.”

Comments are closed

Related Posts