U.S. inflation continues to rise
Deutsche Bank’s Jim Reid called it “the most anticipated data point in recent memory” in his popular morning macro update, and the US Consumer Prince Index was just released in May.
In terms of background, a Reuters survey of US economists estimated that the month-on-month growth from April to May was 0.4%, which was much higher than expected. 0.8% Between March and April.
So, what has American prices done since then? Excellent, Slightly higher than expected:
The US Bureau of Labor Statistics reported today that the Consumer Price Index (CPI-U) for consumers in all cities rose by 0.6% on a seasonally adjusted basis in May and 0.8% in April. In the past 12 months, the All Projects Index rose 5.0% before seasonal adjustment; this was the largest 12-month increase since the 5.4% increase during the end of August 2008.
The used car and truck index continued to rise sharply, rising 7.3% in May. This increase accounted for about one-third of the seasonally adjusted increase in all items. The food index rose 0.4% in May, the same rate of increase as in April. The energy index remained unchanged in May, and the decline in the gasoline index once again offset the rise in the electricity and natural gas indexes.
Therefore, what is different from last month is that this time economists value money more. Despite the 5% price increase, it should not be underestimated. However, it may be worth noting that, especially for inflation hawks, the core CPI, which is inflation minus food and energy, exceeded expectations-0.7%, compared to 0.5%. Not exactly the 1970s, of course, but still a beat.
However, once again, car prices seem to be a major factor. Looking at the data, the price of used cars and trucks rose 7.3% month-on-month.According to customized George Pixar, Which means that rust barrels alone accounted for 40% of core inflation growth from April to May. Those semiconductors didn’t come fast enough.
So, how did the stock market react? Well, not positive. In terms of pixels, the Nasdaq Index fell 0.1%, while the S&P 500 Index and the Dow Jones Index rose 0.2% and 0.4%, respectively. The return of inflationary trade? Well, since 10 years is still 1.5%-although a little bit higher, of course-we are not sure.