US inflation hit 40-year high in June

Record gas prices

Inflation surged to a new pandemic-era peak in June, with US consumer prices jumping by 9.1% year-over-year, according to fresh data released  by the Bureau of Labor Statistics. That’s the highest level in more than 40 years and higher than the previous reading, when prices rose by 8.6% for the year ended in May. It is also much higher than the 8.8% that economists had predicted, according to Refinitiv.

The Consumer Price Index for June also showed that overall prices that consumers pay for a variety of goods and services rose by 1.3% from May to June. Much of the June increase was driven by a jump in gasoline prices, which were up nearly 60% over the year. Americans faced record-high gas prices last month, with the national average topping $5 a gallon across the country. Electricity and natural gas prices also rose, by 13.7% and 38.4%, respectively, for the 12-month period ended in June. Overall, energy prices rose by 41.6% year-over- year.

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Federal Reserve raises key interest rate 0.75%

A move to try to calm inflation

The Federal Reserve said on Wednesday that it is raising its benchmark interest rate by three-quarters of a percentage point, the sharpest hike since 1994, as it seeks to combat the fiercest surge in U.S. inflation in four decades.

The U.S. central bank set its target rate in the range of 1.5 to 1.75%. The federal funds rate, which controls how much banks pay to borrow money from each other, affects borrowing costs for consumers and businesses.

The Fed had previously suggested it was likely to boost rates by half a percentage point at each of its three meetings this year, but recent signals that inflation is accelerating spurred policymakers to move more aggressively to slow economic growth in a bid to tame prices

https://www.cbsnews.com/

Inflation hit a 41-year high in March

Signs price hikes could slow down soon

Prices climbed at the fastest pace in decades in the month leading up to the war in Ukraine, underlining the high stakes facing the United States — along with many developed economies — as the conflict promises to drive costs higher.

The Consumer Price Index rose by 7.9 percent through February, the fastest pace of annual inflation in 40 years. Rising food and rent costs contributed to the big increase, the Bureau of Labor Statistics said, as did a nascent surge in gas prices that will become more pronounced in the March inflation report. The February report caught only the start of the surge in gas prices that came in response to Russia’s invasion of Ukraine late last month. Economists expect inflation to pick up even more in March because prices at the pump have since jumped to record-breaking highs. The average price for a gallon of gas was $4.32 on Thursday, according to AAA.

https://www.nytimes.com/

Commodity prices are spiking

Pay attention to the signals the commodity market is sending

Commodity prices are surging this year. Futures for lean hogscorncrude oilgasoline and lumber have spiked in 2021, a sign thatinvestors see the economic rebound as having roots.

Futures contracts allow traders to lock in a price for a commodity and give insight into where they believe prices are headed. Lumber futures, for example, are up nearly 50% in 2021 which suggests investors believe there will be higher demand for its uses in construction and increased prices tied to inflation.

Quint Tatro, president of Joule Financial, says stock market investors need to pay attention to the signals the commodity market is sending.

https://www.cnbc.com/