US Stocks fell on Tuesday after data released from the US Labor Department showed that Inflation surged in June at its fastest rate in 13 years.
Last month, the consumer price index rose 5.4% from the same time a year ago. This was the largest increase since August 2008, right before the financial crisis hit. June’s CPI figure was also higher than market expectations after analysts forecast a 5% increase which was also’s May annual CPI increase.
And it gets worse. Once the more volatile energy and food prices are removed from the equation, the core CPI increased 4.5% on an annual basis. This was the annual highest rate recorded for core CPI since September 1991 and far higher than the market forecast of 3.8%.
On a monthly basis, both the headline and core prices increased 0.9%, Market estimates were for a 0.5% increase.
Experts Opine on Inflation Figures
Ken Polcari, from Kace Capital Advisors said of the latest CPI figures:
“It came in very hot, much hotter, so it is going to be difficult for the Fed or any of the talking heads to try to talk it away as transitory. It raises the conversation, it is significantly stronger and that plays right into the ongoing inflationary concerns. Tomorrow you are going to get PPI and that is also expected to be stronger, and that is at the producer level which only means a couple of months later after you see it at the producer level it comes down to the consumer level on top of what we already have.
That is going to cause some consternation, between that and what we are seeing already in some of the earnings reports – JP Morgan and Goldman – certainly blowing the roof off the house but you don’t see this big explosion to the upside. You see it is more moderated and the market might get a little bit weaker today.”
Meanwhile, Sarah House, senior economist for Wells Fargo’s corporate and investment bank said:
“What this really shows is inflation pressures remain more acute than appreciated and are going to be with us for a longer period,”
“We are seeing areas where there’s going to be ongoing inflation pressure even after we get past some of those acute price hikes in a handful of sectors.”
