Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The Consumer Price Index (CPI) fell 0.2% in June
Posted Under: CPI • Data Watch
Supporting Image for Blog Post

 
Implications:  The Federal Reserve is losing its main excuse for keeping short-term rates near zero.  Although the headline inflation number fell 0.2% in June, it was all due to what now appears to have been a temporary drop in energy prices.  Higher energy prices in July mean the headline CPI will start moving up again in next month's report.  Today's news is not a reason for the Fed or investors to become complacent about inflation.  Despite the drop in June, consumer prices are up 3.6% in the past year and up 4.2% if we focus on "cash" inflation, which excludes the government's estimate of what homeowners would pay themselves in rent.  Moreover, monetary policymakers have been using low "core" inflation (which excludes food and energy) to justify keeping short-term interest rates near zero.  But core inflation is accelerating.  Although core prices are still up only 1.6% in the past year, they increased 0.3% in June following another 0.3% increase in May.  In the past two months 'core" prices are up at a 3.3% annual rate, the fastest two-month pace since 2006.  The sharp increase in auto prices in June is related to supply-chain disruptions from Japan.  Vehicle prices increased 1% in June and are up at an 11.2% annual rate in the past four months, the fastest pace on record (dating back to 1993).  Inflation has been evident at the producer level for some time.  Now, producers are passing some of those costs on to consumers.  Rising inflation is a concern now, but we fully expect the Fed to maintain short-term interest rates near zero until at least mid-2012.

Click here for the entire report.
Posted on Friday, July 15, 2011 @ 9:12 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Retail sales increased 0.1% in June
PPI falls 0.4% in June; "Core" prices up 0.3%
The trade deficit expanded to $50.2 billion in May
Jobs Versus Government
Non-farm payrolls increased 18,000 in June
ISM services index falls to 53.3 in June
Hasta La Vista, Soft Patch
The ISM Manufacturing index increased to 55.3 in June from 53.5 in May
The Lindsey Rebuttal
No, The US Is Not Greece
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.