The U.S.’s latest inflation report may not be as positive as the White House is playing it off to be…
Last week, the Bureau of Labor Statistics’ Consumer Price Index (CPI) showed prices rose 8.5% on an annual basis. This was below Wall Street’s anticipated 8.7% rise and June’s increase of 9.1% thanks to moderating oil prices.
Month-over-month, the CPI showed prices remained flat with 0% growth. In the previous month, the CPI jumped by 1.3%.
This prompted the Biden administration to say the economy had “zero percent inflation” in July.
But the President’s math doesn’t add up…
Even though inflation wasn’t as high as money manager’s projected, the figure still rose 8.5% on a yearly basis. Meanwhile, the food-at-home index, which represents groceries, surged by 13.1% – marking its fastest rate of growth in 43 years.
This suggests that while there was a slight reprieve in prices at the pump, foods such as flour, chicken, milk, bread, and eggs are hitting record levels.
Year-over-year, flour and chicken prices gained by 22.7% and 17.6%. Meanwhile, milk, bread, and eggs saw prices jump by 15.6%, 13.7%, and 38%, respectively.
And the cost of living also grew. On an annual basis, shelter-related costs climbed 5.7%. Month-over-month, the figure increased by 0.6%.
So, despite July’s “zero inflation,” total inflation growth remains well above the U.S. Federal Reserve’s target rate of 2.5%.
This means we can expect more rate hikes from the central bank in the months ahead – as inflationary pressures are unlikely to end anytime soon.
As a result, investors will likely continue to pile into value plays, safe-haven assets, and cyclical stocks – including one trading at an absolute bargain…
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