Annual inflation rate in the US accelerated to 5.4% in June from 5% in May, hitting a fresh high since August of 2008, and well above market projections of 4.9%. Biggest price increases were recorded for used cars and trucks (45.2%), gasoline (45.1%), fuel oil (44.5%), utility gas service (15.6%) and transportation services (10.4%). Shelter costs increased 2.6% and food 2.4%. Core consumer prices rose 4.5 % in June YoY the largest 12-month increase since November 1991 and well above market expectations of 4 %. The energy index surged 24.5 % over the last 12-months, and the food index rose 2.4 %. According to the U.S. Bureau of Labor Statistics, inflation has been on the rise this year amid low base effects from 2020 and as the economic recovery picks up, business restrictions ease and demand surges amid widespread vaccination and federal support. Meanwhile, high commodity prices, supply constraints and higher wages as companies grapple with a labour shortage continue to weigh on the CPI.
Headline CPI increased 0.9% MoM (against market estimates of 0.5%), the highest MoM increase since June 2008. This caused the CPI increase to 5.4% YoY.Source: Bloomberg via ZeroHedge
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Used vehicles accounted for one third of the gain in the CPI last month. Shelter costs are also increasingly contributing to the rise in inflation. Source: xStation
Expectations that hte rate-hike will occur by the end of 2022 rose sharply. Source: Bloomberg
Inflation and upbeat economic data have dictated movement of major US indices since mid-June as investors remain concerned that an overheating economy amid a faster reopening and job creation could force FED to scale back its ultra-loose monetary policies sooner than expected.
