Inflation Hits Some Prices More Than Others

- Advertisement -

Inflation heated up in June, driven by continued strong consumer demand and lingering supply constraints. Overall consumer prices rose 5.4% in June from the previous year, the highest 12-month rate since August 2008, the Labor Department said Tuesday.

But consumer prices don’t all move at the same pace or for the same reason. To get a sense of where inflation is heading, it helps to look at price movements item by item.

There are four main trends underlying the June inflation report. First are the items where prices fell sharply at the start of the pandemic and that are now returning to their pre-pandemic levels. Second are items where prices have temporarily risen above their pre-pandemic levels due to supply constraints and could come down. Third are items where prices are likely settling at a permanently higher level. And fourth are items where price increases have slowed rather than accelerated as a result of the pandemic, at least for now.

These trends exert competing forces on overall inflation as the economy adjusts to a new normal, said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.

“It’s very unlikely a year from now we’d be seeing this continued type of rate of change in inflation,” she said.

Latest news
Related news

LEAVE A REPLY

Please enter your comment!
Please enter your name here