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A Deeper Dive Into Inflation

July 28, 2022

Many people have not experienced inflation during their lifetime. Others wonder if we are repeating inflation from the 70s and 80s. The causes of inflation then and now are dissimilar but the end result is the same – higher prices. The Labor Department reported that the Consumer Price Index (CPI) for June 2022 was 9.1% higher when compared to June 2021.

This is an average number. In an article from the Wall Street Journal on July 16th “Up Up Up,” they took 100,000 data points using numbers from the Bureau of Labor Statistics to create detailed inflation information. Below are some of their findings.

Education: +2.7%Apparel: +5.2%
Prescription drugs: +2.5%Postage: +3%
Toys: +1.9%    Cookies: +14.7%
Computer: -0.6%Lunch meat: +18%
Car/truck rentals: -7.7%Energy: +41.6%
Admission to sporting events: -6.1%New cars: +12.5%
Milk: +16.4%  Watches: -1.1%
Chicken: +18.6%Apples: +6%
Televisions: -12.7%Smartphones: -20%

According to the University of Michigan survey, consumer sentiment fell to low levels reminiscent of the 1980 recession.

It seems a foregone conclusion interest rates will rise but how quickly and how much is unknown. It is likely to negatively impact the financial markets – at least in the near term.

While the reasons for the current inflation are different than in the 70/80s, we did overcome the obstacles and the economy grew again; the financial markets increased. While being in the middle of the negativity that is hard on investors.

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