For the crowd that thinks inflation has not happened since the end of the Great Recession…
According to the Department of Labor, consumer prices climbed in June at the fastest pace since the beginning of 2012, buoyed by auto insurance, higher rent, and soaring gasoline prices.
The consumer price index (CPI) rose 0.1 percent, but the inflation rate advanced 2.9 percent from the same time a year ago, the biggest increase in more than six years.
Core prices, which exclude food and energy, rose 0.2 percent last month and 2.3 percent from a year ago.
The data may give the U.S. central bank more ammunition to pull the trigger on two more rate hikes this year.
It is going to be interesting when the Federal Reserve fully unwinds its $4.5 trillion balance sheet in addition to all of the money-printing of the last decade. Whether this happens under President Donald Trump or his successor, it remains to be seen.
“The data may give the U.S. central bank more ammunition to pull the trigger on two more rate hikes this year.”
That would be crazy. Raising interest rates causes inflation.
If a company sees the cost to borrow money go up, it has to raise the prices of the goods and services it sells, adding to inflation.