In May, the CPI rose 8.6% year on year, raising concerns on Wall Street that inflationary pressures aren’t fading.
The yellow metal gained over 2%, and Wall Street suffered one of its worst closing weeks this year. The bureau of labor statistics released its CPI results this morning, which was a major shock to interested parties.
April’s consumer index was 8.3%, a slight decline from March’s CPI index, which was estimated at 8.6%. Yet, Mai’s consumer index rose by 0.3% to hit 8.6%, the highest year-to-year inflation increase over the past 40 years. As we head into imitating the Federal Reserve’s balance sheet reducing plan,
The S&P 500 had dropped 166.96 basis points to 3,900.86 points as of 3:50 PM New York time. fell by more than 3.5% amid fears of a global chip maker shortage. The S & P experienced its worst fall since January 2022, making it one of its worst-performing years over the past two years.
The Dow Jones industrial average falls by 2.73% to reach 31,392.79 basis points. Subtly, it seems that the Federal Reserve’s tightening policies don’t have any clear results to measure or rely on.
Despite what the White House says and feels about the interest hikes, the concerns can’t take it anymore.
The CPI report shows that food and energy prices rose sharply from month to month, amid fears of a market recession. It all comes down to one reality, and that is that the FED policymakers have failed to bring down prices to their pre-pandemic levels.
It’s expected that by next week, the Federal Reserve will start reducing its balance sheet and bond purchasing abilities. Furthermore, investors believe that policymakers will raise interest rates by 50 basis points at each meeting in June and July.
Today’s disappointing consumer index reports also brought another theory and forecast to the table: a 75 bp interest rate hike. Yes, it’s true, the probability of more aggressive interest hikes remains a solid option for the Federal Reserve chairman.
Based on the report’s results and the data represented by experts, the peak in inflation isn’t necessarily due to the current energy crisis and supply chain shortages. Consumer demands are also considered a key factor for the high jump in the product consumer index.
The labor market in the U.S. remains fragile, despite the improvement in the hiring sectors. Hover, inflation, and wages increased as a result of rising consumer demand, putting the corporate world in a difficult position.
The increases in material costs, chip shortage, supply chain shortage, low labor force, and strong demands. These five factors play a major role that enables them to affect the current market supply and demand concept.
Ben Ayers, senior economist at Nationwide said that; inflationary pressure is not fading and may be gathering steam. His word hints that greater challenges are coming in the upcoming months. As for our futile outlook, things are fogy more than ever, which takes us to Elon Musk’s tweets that warned about such a scenario.