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July 16, 2018 — Consumer Prices Rise 2.9 Percent in 12 Months

JULY 16, 2018 – CONSUMER PRICES RISE 2.9 PERCENT IN 12 MONTHS

Consumer prices rose negligibly in June, up 0.1 percent, but the 12-month CPI gain is the greatest experienced since February 2012.  The inflation trend is indicating a steady buildup of pressure that may keep the Federal Reserve on track for steady and gradual interest rate increases.

The Labor Department’s announced CPI increase fell short of expectations of 0.2 percent as gas prices rose slowly and apparel prices fell.  If the food and energy components are excluded, the CPI rose 0.2 percent the same as was seen in May.  The core CPI is up to 2.3 percent, the largest rise since January 2017.  With the labor market tightening and raw material costs rising due to new tariffs, inflation is expected to keep moving up through the next year.  Manufacturers have not yet passed higher costs onto consumers.

The Fed has stated they will not be too concerned if the inflation rate exceeds their target.  In anticipation of rising inflation and rising interest rates, take time to review your future debt obligations and the advantages available by using hedges such as interest rate swaps.