Updated: Oct 7, 2021
August inflation did not go much higher as many expected. Why?
Yesterday, the BLS reported 5.3% year-over-year inflation and 3.3% 2-year inflation. It wasn't a total disaster, but it is still high and many expected worse numbers. What is missing?
The Bureau of Labor Statistics says urban inflation for housing was a measly 2.8% year-over-year last month. Does anyone believe that after looking at rent and housing prices this summer? It is likely these readings are going to slowly find their way into the inflation metrics and that the Fed's forecast of "transitory inflation" will prove NOT transitory. Shelter is one of the largest components of the CPI calculation and it is likely to contribute positively for several quarters.
We expect inflation readings to remain high, especially if another large stimulus program is approved by Congress.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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