Reality Check
There's No Hiding From the Bad News This Time
Markets have few silver linings to focus on after a terrible inflation report
"As a rule, it’s good in these newsletters to challenge the conventional wisdom a little, and try to show that there’s something people are missing. That’s not going to be possible this time. The US consumer price inflation data, published Friday morning, were widely regarded as terrible. That is because they were. Not only were the headline numbers awful, but the data grew worse the more you looked. You can hear me and Lisa Abramowicz struggle to find something good to say about it . . .
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US inflation could lead to a global interest rate hike
Source: Envato Elements
The US dollar has risen steadily over the last two months in tandem with inflation. As such, the Fed announced plans to increase interest rates in late 2023. In response, the world’s central banks will have to do the same, which risks stifling economic recovery, especially in developing countries
- CPI measures the weighted average urban consumers pay for a standardized market basket of goods and services. It is reported monthly by the Bureau of Labor Statistics (BLS).
- PPI is a weighted average of prices realized by domestic producers. It includes prices from the first commercial transaction for many products and some services. It is also reported monthly by the BLS.
- The PCE Price Index is a broader measure than the CPI of the change in the price of goods and services purchased by consumers. It is released monthly by the Bureau of Economic Analysis of the U.S. Department of Commerce
All three of these indices provide an alternative "core" reading excluding the more volatile food and energy prices.
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