Inflation figures not seen over ten years are seen in consumer and producer pricing surveys from July 13 and 14. The increase in the Consumer Price Index (CPI) was far higher than projected, up 0.9 percent in June. The Producer Price Index (PPI) surged 1.0 percent in June. The price increases raise significant inflation concerns, considering the Biden administration’s immense spending proposals and unprecedented increases in the nation’s money supply.
The PPI increased by 7.3 percent in the 12 months ended in June. This gain has been the highest since 12 months ended November 2012. PPI surpassed 0,5% of the projected sum. As a cause for the more significant than projected increase, analysts mentioned the issues in the supply chain.
The annual CPI for all consumer items was up 5.4 percent for the year ending in June 2021. The 12-month increase is the largest since the period ending November 1991. Consumer energy prices surged 24.5 percent over the last 12 months, with food prices going up 2.4 percent.
Used car prices shot up 10.5 percent month over month in June, following a 7.3 increase in May. New car prices had the most significant one-month increase since 1981, going up 2.0 percent.
The Federal Reserve continues to downplay the threat of inflation while purchasing record numbers of Treasury securities and maintaining historically low-interest rates.
Meanwhile, some economists are beginning to send up inflation warning flags. Deutsche Bank economists said, “The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. Explosive growth in debt-financed largely by central banks is likely to lead to higher inflation,”
The bank’s economists also said that “We worry that the painful lessons of an inflationary past are being ignored by central bankers, either because they believe that this time is different, or they have bought into a new paradigm that low-interest rates are here to stay, or they are protecting their institutions by not trying to hold back a political steam roller.”
These economists note similar inflationary indications seen in the 1970s compared to current conditions, including rising fuel costs.
Unemployment in June sat unchanged at 5.9 percent. The continuing stimulus spending alleged to be part of Covid-19 relief and extended federal unemployment benefits contributes to persistent unemployment.
Concerns about consumer confidence are also on the rise. Ordinary working people and retirees on fixed incomes usually are hit hardest by inflation, which becomes an applicable tax on those hit hardest by rising prices.