The Labor Department’s report of the Consumer Price Index (CPI) for June, heavily doctored as it is, showed inflation at a rate not seen since mid-2008; the Index was up 0.9% in June alone – the fastest momentary inflation in this upsurge thus far — and up 5.4% from last June. Notable was the runaway increase in prices of energy in various forms, which also betrays the operation of the Green New Deal and “green finance.” Fuel oil prices, for example, rose by 2.9% in June alone, more even than gasoline; and natural gas prices rose by 1.7%. The related increase in transportation costs for the month was 1.5%.
Real wages took the brunt: For production and non-supervisory employees, real hourly wages fell by 0.6% in June, and real weekly earnings dropped by a large 1.2% during the month.
On July 14, the separate set of “producer price” indices were released, and had risen even faster in June, by 1.2%, making a 2.5% rise in the three months of the second quarter 2021.
Now we learn what the Federal Reserve is good for. Despite the big CPI inflation figure released yesterday, and even bigger producer-price inflation figures released today, stock markets rose Wednesday, July 14 and Treasury bond interest rates plunged because Fed Chair Jerome Powell said in his (pre-released) House Financial Services Committee testimony, that there’ll be no easing of QE in the foreseeable future. And QE is what matters.
“At our June meeting, the Committee discussed the economy’s progress toward our [inflation] goals since we adopted our asset purchase guidance last December,” Powell said. “While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue.” CNBC commented, “Yields fell even as a reading on producer prices from June showed higher than expected inflation.”
