In part as a result in response to July’s increase in consumer spending, the shortage of products, and supply chain disruptions, the Consumer Price Index (CPI) rose 0.6 percent in July, equaling its rise in June and upsetting analysts’ forecast of a 0.3-percent hike.
The rise was greater than June’s 0.2 percent and put consumer prices 1 percent above their level a year ago.
The hike in July’s index was the biggest single monthly bump since January 1991.
Gasoline prices jumped 5.6 percent, and the average price of a used car edged up 2.3 percent because people began driving more as state and local economies reopened.
“The July CPI readings should end any speculation that the… slump in demand” caused by the economic shutdown “will quickly push the economy into a deflationary spiral,” said Paul Ashworth, U.S. economist at Capital Economics.
TRENDPOST: The rate at which prices are currently rising leaves them below the U.S. Federal Reserves’ inflation limit of 2 percent inflation a year. Thus, not only will they not raise them to cool inflation, it portends the Fed will lower them to juice the economy.
However, supply chain disruptions are pushing prices higher. As the dollar declines, it will take more of them to buy products and services, thus pushing inflation higher long term.
Again, the higher inflation goes, the higher gold and silver prices will rise.
