INFLATION: the 12-month CPI increased from 8.3% to 8.6% for May 2022. Energy prices were up 35% and that is worldwide AND Used Car Prices were up 16%. Exclude energy, food, and Used Cars and inflation was 5.8%. The Federal Reserve sets interest rates based on the PCE which is 5.1%.
INFLATION’s major causes are: higher Energy and Used Car Prices. As a bar gets closer to the LEFT, it will fall off as new monthly data becomes available. The black hatched bar is the month that has recently fallen off and has been replaced by the most recent month’s data, that being May 2022. Higher interest rates will NOT solve these isolated sources of inflation.
GAS PRICES are an international item that affects all. Putin invades Ukraine on 2.24.22 and Gas prices were up 19% in March.
The March 2022 spike will continue to be included in the annual CPI calculation for the
next 11 months. It is the gift that will keep on giving. For June gas prices are up 17% over
May. This increase will show up in June’s CPI to be reported on July 13. This will be an UGLY number and will boost Energy and the CPI total.
As we move forward in 2022, as the impacts of COVID subside, the economy will come into focus. Below are the publication dates of the CPI, PPI, and Net New Jobs. These items will be key factors during the Federal Reserve’s meetings which are also listed below.