Yesterday, the Consumer Price Index, “CPI”, reportedly rose +1.2% in March which translates to headline CPI u to +8.5% on a year-over-year basis – the highest reading since 1981. The monthly increase of +1.2% is the biggest since September 2005, and CPI has risen for 22 straight months, coinciding with the fallout in the equity markets following March 2020. Perhaps most importantly for the average American, who actually has to pay for “stuff” every day (groceries, gas, health care, etc.), real average hourly earnings fell for the 12th straight month. According to a recent poll conducted by NBC News, 62% of Americans say that their incomes are unable to keep up with the rising cost of living.
Inflation is certainly a hot button topic these days, especially in Washington as well as amongst Wall St.’s biggest banks. According to JPMorgan, in their Daily Economic Briefing, as well as Goldman Sachs and Deutsche Bank, many firms are citing this as peak inflation. Most of their beliefs are focused on the fact that inflation began to significantly pick up in March/April 2021. Therefore, on a year-over-year basis, the growth rate will eventually slow. However, what is lost in this debate is the fact that prices are higher than they were two years ago and there doesn’t seem to be any reprieve in sight for consumers.