Inflation Saga Far From Over: Services CPI in the Euro Area Refuses to Slow for Eighth Month in a Row
by Wolf Richter
Wolf Street
Lagarde frets over surging labor costs feeding into services inflation.
In the 20 countries that use the euro, inflation in services increased again by 4.1%, same increase as in May – and both were the highest since October. The service CPI has gotten stuck at around 4% year-over-year for the eighth month in a row, after coming down substantially to that point.
On a month-to-month basis, services CPI jumped by 7.4% annualized and has been in that range and higher over the past five months. These super-volatile and highly seasonal month-to-month readings tend to be red-hot in the first half of the year and then fall later in the year.
New Fed Data Indicates Wages Won’t Offset Inflation Anytime Soon
from PYMNTS
Since the start of the pandemic, PYMNTS Intelligence has tracked the real impact of inflation, as real wages, adjusted for price increases, have failed to keep pace with sticker shock.
Coming into 2024, PYMNTS found that 85% of consumers said increases in their paychecks had not matched the pace of higher pricing. Eighty-two percent of respondents said concerns about inflation topped their lists of economic woes, and only 17% held out any hope that inflation would subside anytime soon. About 4 in 10 consumers said they anticipated a wage increase this year, down from 43% who expected a raise in 2023.
In the meantime, inflation is cooling a bit, at least as measured in the latest reading for May, at 3.3% annualized.
Any relief in the paycheck-to-paycheck economy may prove short-lived, however.
Powell Encouraged by Cooler Inflation Data: ‘We Are Getting Back On a Disinflationary Path’
by Jennifer Schonberger
Yahoo! Finance
Federal Reserve Chair Jerome Powell said Tuesday that he is encouraged by cooler inflation but reinforced that the central bank will need to see more evidence before cutting interest rates.
The last two inflation readings in April and May “do suggest that we are getting back on a disinflationary path,” Powell said while speaking on a panel in Portugal for a European Central Bank conference.
Powell’s comments come days after the latest reading of the Fed’s preferred inflation gauge — the “core” Personal Consumption Expenditures (PCE) index — rose 2.6% in May, in line with expectations and down from 2.8% in April.
That marked the slowest annual gain in more than three years.
On a month-over-month basis, the inflation measure rose 0.1%, also in line with expectations and down from 0.2% in April.
Yellen Denies Food Inflation
by Martin Armstrong
Armstrong Economics
Treasury Secretary Janet Yellen once again is once again gas lighting the public to believe that the Biden Administration has inflation under control. When questioned about the rising prices at grocery stores, Yellen denied that prices have soared astronomically.
“I think largely it reflects cost increases, including labor cost increases that grocery firms have experienced, although there may be some increases in margins,” Yellen, who has a net worth of $20 million, stated. She later touted that she met with several grocery store CEOs who said they were cutting costs. After all, Biden has continually blamed “greedy corporations” for rising food prices. “I think that’s to be applauded, I think that kind of thing is helpful, but I would be reluctant to agree that we should be centralizing agriculture,” Yellen added.
U.S. Inflation Slowing Again, but Fed Chair Powell Warns it Isn’t Yet Time to Cut Rates
by Christopher Rugaber
PBS
WASHINGTON (AP) — Inflation in the United States is slowing again after higher readings earlier this year, Federal Reserve Chair Jerome Powell said Tuesday, while adding that more such evidence would be needed before the Fed would cut interest rates.
After some persistently high inflation reports at the start of 2024, Powell said, the data for April and May “do suggest we are getting back on a disinflationary path.”
Speaking in a panel discussion at the European Central Bank’s monetary policy conference in Sintra, Portugal, Powell said Fed officials still want to see annual price growth slow further toward their 2% target before they would feel confident of having fully defeated high inflation.
ECB’s Lagarde Foresees a Bumpy Road to 2% Inflation Amid Uncertainties
by Piero Cingari
EuroNews
ECB President Christine Lagarde highlighted the complex journey towards the 2% inflation target at the ECB Forum on Central Banking in Sintra.
Christine Lagarde, President of the European Central Bank (ECB), highlighted the complex journey towards achieving the ECB’s 2% inflation target during her address at the ECB Forum on Central Banking in Sintra on Tuesday. Despite recent rate cuts and signs of disinflation, Lagarde emphasised the uncertainties that still loom large over the euro area’s economic landscape.
Speaking at a panel also featuring Federal Reserve Chair Jerome Powell, Lagarde explained the ECB’s decision to cut rates by 25 basis points in June.
Why You Should Invest in Gold Before the July Inflation Report’s Released
by Joshua Rodriguez
CBS News
The Bureau of Labor Statistics releases an inflation report every month. This report gives economists, investors and consumers an idea of how fast prices are growing in the United States. And, the state of price growth in the United States can impact financial markets. The precious metals market may also react to the next inflation report. And, that means the report can cause the price of gold to move.
The next inflation report will be released on July 11, 2024. This month’s report will show June’s inflation rate. And, this is a crucial report to watch. Inflation had cooled in April and May. Continued cooling of price growth could lead to a Federal Reserve rate cut.
But, regardless of whether inflation continues cooling or starts to pick back up, it may be a good idea to buy gold before the report comes out. Below, we’ll explain why you may want to act now.
Consumers Don’t Like Inflation, Will Be Cautious
by Bill Conerly
Forbes
Consumer sentiment has dropped sharply since the first of the year, according the University of Michigan’s survey. The Conference Board’s Consumer Confidence measure did also. Inflation is probably the culprit.
President Biden’s supporters have argued that people should enjoy the current economy. Alan Blinder’s view ran with the headline, “The Economy Is Good. Why Don’t People Know It?” The argument that people ought to be happy includes unemployment of just 4.0%, well below the historical average. And it’s not just a case of discouraged workers not counted as unemployed. The employment/population ratio of 60.1% is nearly a percentage point higher than average.
Pelosi: Biden is Reducing Inflation
by Jeff Poor
Breitbart.com
Wednesday on MSNBC’s “All In,” Rep. Nancy Pelosi (D-CA), the former Speaker of the House, declared President Joe Biden was “reducing” inflation in America.
According to the California Democrat, Biden was not only proactive regarding the U.S. economy but also employed means to save the world from climate change.
“So then you look at something else,” she said. “People are concerned about inflation; 16 Nobel laureates came out this week and said that if what’s-his-name were elected president, with his fiscal policies, inflation would just increase enormously in our country. And you have Joe Biden on the other side of that screen leading the world in reducing inflation in our country. So, if you talk of any subject you can talk about, if you’re — young people care so much about another scientific issue, climate, saving the planet.”
The Real Reason Fast Food is So Expensive
by Jon Miltimore
The American Institute for Economic Research
I recently drove to the local KFC and ordered a 12-piece meal to go. The price was just under $50 (tax included). Fortunately, I had a coupon that saved me some money, but I’d be lying if I said I didn’t feel some sticker shock.
Inflation has of course been a major issue in recent years, but fast food prices in particular seem high, and many consumers are getting angry about it.
McDonald’s recently took heat over news of an $18 Big Mac Meal that executives responded to by publishing an online letter, explaining that the price was unusually high.
“I can tell you that it frustrates and worries me, and many of our franchisees, when I hear about an $18 Big Mac meal being sold — even if it was at one location in the US out of more than 13,700. More worrying, though, is when people believe that this is the rule and not the exception.”