It is #CPIDay and all (CP)eyes in the markets and at the Fed are on US inflation data due in 5 minutes. The focus will be on M/M core goods and core services.
May M/M Headline #CPI up whopping 1.0%
M/M Core up 0.6%
Lets dive in to see what caused this broad based spike upwards:
M/M Core up 0.6%
Lets dive in to see what caused this broad based spike upwards:
And the answer is that Core Goods jumped up 0.7% M/M, relative to a decline of 0.4% in March and and increase of 0.2% in April. Core Services moved up 0.6%, a bit higher than prior months, on an expected jump in rents and owners equivalent rents (both up 0.6% M/M).>>
Core goods were moved dramatically higher by a reversal in prior slowing of price growth of transportation equipment - new and used cars and trucks - all of which spiked up 1.0% or more on the month. Apparel, up 0.7% M/M also accelerated core prices.>>
Headline was, as expected, driven by a whopping increase in energy costs, up 3.9% on the month after falling -2.7% the month prior in a roller coaster of volatility. Food was up another 1.2% on the month.>>
This report assures that the Fed will be raising interest rates throughout the summer/early-fall until it sees the whites of disinflations eyes.
It is clear now that companies are successfully passing through price increases no longer necessarily instigated by supply blockages.
It is clear now that companies are successfully passing through price increases no longer necessarily instigated by supply blockages.
Having said that, the laws of supply and demand will soon take hold at core (putting aside the disruption caused by the Ukraine conflict).
The US economy is slowing and household savings are being eroded, and with that demand.
China is reopening and shipping costs are falling.END
The US economy is slowing and household savings are being eroded, and with that demand.
China is reopening and shipping costs are falling.END
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