Inflation Tops Nine Percent

(KNSI) – Inflation hits a new 41-year high.

The June figure released Wednesday morning shows prices rising by 1.3 percent compared to the prior month and 9.1 percent on an annualized basis. Energy and commodities led the way, but rents jumped significantly. Dental care was up 1.9 percent, the most on record.

The broad-based price increases almost assure the Federal Reserve will have another hefty interest rate hike on July 27th. The market is split on a move of three-quarters of a percent or a full percent. The retail sales report is released on Friday, possibly the determining factor.

If the consumer is still spending that would give Fed Chairman Jerome Powell and the Open Market Committee cover to continue the sharp hikes. The Bank of Canada hiked by a full percent Wednesday, which may be a preview of the next move for our central bank.

As the Federal Reserve raises interest rates, the question turns to when relief may come for weary consumers. Unfortunately, it won’t be right away. July, August, and September of last year all saw modest inflation reports. The rate of change could moderate significantly in the coming months and the annualized inflation rate will remain high due to the easier comparisons.

___