Inflation continued to surge in June – the fastest pace in nearly 13 years. The consumer price index increased 5.4% from a year ago, the largest jump since just before the financial crisis. On a monthly basis, headline and core prices both rose 0.9% against 0.5% estimates. According to CNBC, inflation has been escalating due to a number of factors, including supply chain bottlenecks, extraordinarily high demand as the Covid-19 pandemic eases, and year-over-year comparisons to a time when the economy was struggling to reopen in the early months of the crisis. on Tuesday, gold prices were modestly up in early U.S. trading while traders awaited the new data.
Inflation climbs higher than expected in June as price index rises 5.4%
Inflation continued its rapid surge in June, rising at its fastest pace in nearly 13 years amid an ongoing burst in used vehicle costs and increases in both food and energy, the Labor Department reported Tuesday.
The consumer price index increased 5.4% from a year ago, the largest jump since just before the financial crisis. Economists surveyed by Dow Jones had been expecting a 5% gain.
Stripping out volatile food and energy prices, the core CPI rose 4.5%, the sharpest move for that measure since September 1991 and well above the estimate of 3.8%.
On a monthly basis, headline and core prices both rose 0.9% against 0.5% estimates.
Stock market futures fell following the report, while government bond yields, which have been down precipitously, were mixed.
Inflation has been escalating due to a number of factors, including supply chain bottlenecks, extraordinarily high demand as the Covid-19 pandemic eases, and year-over-year comparisons to a time when the economy was struggling to reopen in the early months of the crisis.
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Fox Business/Megan Henney
What is the debt ceiling?
Congress is barreling toward a summer battle over spending levels as Democrats rush to craft a pair of spending bills while simultaneously addressing the debt ceiling to keep the U.S. from defaulting on its financial obligations.
In 2019, former President Donald Trump suspended the nation’s borrowing limit for two years, but that suspension is poised to expire on July 31, and Democrats seemingly do not have a plan yet to raise the limit or suspend it again.
“We’re considering all options,” House Speaker Nancy Pelosi recently told Bloomberg News.
While testifying before Congress, Treasury Secretary Janet Yellen urged lawmakers to address the looming debt ceiling, warning that failure to do so could lead to a financial crisis that would threaten the jobs and savings of Americans still recovering from the coronavirus pandemic.
“Defaulting on the national debt should be regarded as unthinkable. Failing to increase the debt limit would have absolutely catastrophic economic consequences,” Yellen said. “It would be utterly unprecedented in American history for the United States government to default on its legal obligations.”
But what is the debt ceiling, which is often used a political football – and how could it affect individual Americans if Congress fails to raise the cap?
The debt ceiling, which is currently around $22 trillion, is the legal limit on the total amount of debt that the federal government can accrue; according to the Committee for a Responsible Federal Budget, it applies to both the $16.2 trillion held by the public, and the $5.9 trillion owed by the government.
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Kitco News/Jim Wyckoff
Modest price gains for gold as key U.S. inflation report looms
Gold prices are modestly up in early U.S. trading Tuesday, while silver prices are a bit weaker. Traders were awaiting the U.S. economic data point of the day: the June consumer price index report, seen up 0.5% from May and up 5.0%, year-on-year. Some U.S. and global inflation readings have been running hot lately and a hotter U.S. CPI reading today would likely impact markets, including pushing bond yields up. August gold futures were last up $3.30 at $1,809.30 and September Comex silver was last down $0.044 at $26.195 an ounce.
Global stock markets were mostly higher overnight. The U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins and at or near record highs. The global markets are still not paying serious attention to the new Covid-19 variant that is spreading in some parts of the world and is beginning to threaten some regional economies. Focus this week is on U.S. corporate earnings reports.
China reported surprisingly strong export data Tuesday. June exports rose 32.2% versus 27.9% in May, year-on-year and 23.0% forecast. China’s imports in June rose 36.7% versus 51.1% in May and 25% forecast.
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