Tag Archives: BLS CPI

CPI (Consumer Price Index) – Inflation Measure Holds High — FOMC (Federal Open Market Committee) Green Light for Continued Tightening …

Last Friday, June 10, 2022 the BLS (Bureau Of Labor Statistics) released their monthly data on the CPI (Consumer Price Index – Great Analysis Link Here) Most blunt measure of inflation — Ok lots of abbreviations but stick with us for the main takeaways…

For the record we called a possible top here, and while the increase of the CPI was only .4% than the prior month, it was NOT a deceleration YET…

Bottom Line Result

Cutting to the chase for those with little time – This hotter report will give the FOMC (Federal Open Market Committee) led by Jerome Powell a green light for further tightening faster – creating a faster slowing of the economy…

Quick FOMC Fed Funds Analysis – The Rate Increase Measure

(Take note once again, the first rate hikes on far left of chart took three years…. the next rate hike cycle ..one in middle right, took almost FOUR years… this one MAY be literally months… again this fits our thesis of headwinds came fast and are behind us (Look Forward not Back)– had to put that plug in while we were on the topic…)

CPI Analysis – What’s the Hold Up

With Owners Equivalent Rent/shelter being a very large portion of the CPI component…. its fast turn around is holding the CPI Up along with food inflation as well….

Note that far right movement up….

Oh and oil prices moving higher did not help either…..

Bottom line, continued FOMC rate increases, faster slowing of the economy, eventually… lower interest rates faster …..

Sorry for the heavy Monday, but wanted to get it out there to you guys as it helps us clarify as well!

Have a Great ” Sticky CPI Explained” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

CPI – Consumer Price Index Further Analysis … Why it has likely peaked, Tough Comparable

The lead Article in our Q 2 2022 Newsletter, reviewed here along with a Video review as well, spoke to a possible tough comparable slowdown from the over $1 Trillion of stimulus pushed directly into the economy almost exactly one year ago …. and was all about the hurdle coming up from the calendar cross over of that stimulus…

Consumer Price Index (CPI) Not Immune to Comparable

In a very similar vein as the above mentioned hurdle, the inflation index gauge/CPI that many follow (Especially the FOMC) closely has a very similar hurdle event occurring…..

Notice the very large annual increases in January and February of 2022? (Orange Bar) But look close at the relatively benign reading from the prior year (tiny blue bars) … That benign reading is the base comparison at which the index comped…

Pretty easy to see as we go further into the year, the base comparisons are much harder (blue bars rising fast)….

As detailed here on our “Make UP of the CPI’ there are components that have risen a lot … think oil and rent (here is a great discussion we had on rent increases directly), which has a lag effect of coming into the system

These increases are not likely to be enough to cover the tough comps…..

Bottom Line: Likely to see peak CPI numbers within the next few readings….

Lastly, while the CPI may normalize, many if not most inflated items (wages, food, consumer services) will likely stay at the current level…. but not continue upward…

As the FOMC led by Jerome Powell attempt to lower this number, a natural slowing may already be a tailwind.

Have a Great “CPI Likely Peaking” Day!

John A. Kvale CFA. CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents