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As we have noted, the U.S. Federal Reserve has called current pressures inflating prices for everything from milk to manganese “transitory.”
Now Costco CFO Richard Galanti has put a tentative timeline to that in a late May earnings call reported by Yahoo Finance. These pressures “will continue for the most part of this calendar year,” Galanti said.
Repeating what we have been reporting and Trends Journal readers are fully aware of, the global shortage of computer chips is pushing up prices on a range of industrial and consumer goods, a void that will take months to fill. Shipping and delivery costs also have risen. (See our 11 May article, “SUPPLY CHAIN DROUGHT” and our 25 May article, “SHIPPING DELAYS HELPING TO INFLATE PRICES.”)
“Inflationary factors abound,” he said.
“These include higher labor costs, higher freight costs, higher transportation demand, along with the container shortage and port delays, increased demand in various product categories, various shortages of everything from chips to oils and chemical supplies by facilities hit by the Gulf freeze and storms and, in some cases, higher commodity prices,” he added.
TRENDPOST: As the inflation rate increases, retailers and manufacturers will – and are – raising prices, a trend we highlighted in our 4 May article “PRICES FOR CONSUMER GOODS SET TO RISE.”)
The core Personal Consumption Expenditure Price Index increased faster than expected, up 3.1 percent in April, according to the U.S. Commerce Department, as we reported in our “U.S. Market Overview” on 1 June.
The Fed has set 2 percent as a comfortable inflation rate for the U.S. economy; but in April, the Labor Department clocked the rate at 4.2 percent, year on year.
However, as we have detailed, the equity markets are still playing down the risk of rising inflation since the higher inflation rises, so, too, will interest rates. When the cheap money stops flowing, equities and economies will steeply decline.