The Core PCE, a key inflation gauge the Fed uses which excludes food and energy, increased 3.5% year over year in June. According to the Bureau of Economic Analysis, the reading was the highest since July 1991. Data also showed that consumer spending rose 1%, which was faster than expected as personal income also increased. Labor costs rose as well, with compensation rising 2.9% from a year earlier. In other news, gold finally broke out to the upside on Friday.
Key inflation indicator up 3.5% year over year in June for fastest gain since 1991
An inflation indicator that the Federal Reserve uses as its key guide rose 3.5% in June, a sharp acceleration that was nonetheless right around Wall Street expectations, the Commerce Department reported Friday.
The personal consumption expenditures price index excluding food and energy was expected to increase 3.6% at a time when the U.S. economy has seen its highest inflation pressures in more than a decade.
That gain was slightly ahead of the 3.4% May increase and represents the biggest move since July 1991.
Fed officials have said they expect the inflation surge to be transitory as it has come largely from industries sensitive to the economic reopening, as well supply chain bottlenecks and other issues likely to fade. The central bank targets 2% as its desired inflation goal, though officials are willing to tolerate higher levels temporarily as the economy tries to get back to full employment.
The core PCE index rose 0.4% month over month, which was below the 0.6% Dow Jones estimate, indicating that inflationary pressures may be starting to ebb at least a bit.
Personal income and spending numbers, however, were better than expectations as consumers flush with stimulus cash kept the economic rebound going.
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Kitco News/Todd “Bubba” Horwitz
It’s true, gold is breaking out to the upside
Gold has finally broken out to the upside with Thursday’s bullish action. It has been attempting to break out for weeks but kept failing, leaving a bearish tint around the yellow metal. We have reversed gold to long
Silver and platinum are still struggling to hold critical levels and Thursday’s action, until proven otherwise, was a dead cat bounce or short-covering rally. Silver and platinum are quite a distance from breaking out to the upside and we remain short.
Our expectations are mixed; the gold rally could fail, reversing gold back to short, joining silver and platinum. Or the bearish trends in the others could reverse, and we could belong across the board. There is no real way to tell but watching price action, which is split.
Keep reading, here.
CNN Business/Charles Riley
The world’s biggest food company says prices are going even higher
The world’s largest food and beverage company is introducing even bigger price hikes as commodity and transportation costs surge.
Nestlé, which sells everything from ice cream to coffee and cereal, said on Thursday that it would respond to higher input costs by raising prices in the second half of the year.
“Inflation has been virtually absent for a number of years and then pointed up very sharply. It hit us directly,” CEO Mark Schneider told reporters on a conference call.
Schneider said he believes that inflation is transitory. But the owner of brands including Nescafe, Gerber and Cheerios said it would need to raise prices by roughly 2% to offset cost increases of 4%. Nestlé hiked prices by 1.3% in the first half of 2021.
The company can hedge against some cost increases, such as rising coffee prices, said Schneider. But it can’t avoid the rising cost of things like transportation, which puts pressure on the company’s margins.
You can read the full story, here.