3 Reasons not to panic about decades-high inflation

SAN DIEGO (KUSI) – Sully, Co Host of On the Air with Sully and Little Tommy, joined KUSI’s Lauren Phinney on “Good Morning San Diego” to discuss the 3 reasons why you should not panic about the decades-high inflation.

U.S. inflation climbs to new 41-year high of 9.1%

The numbers: Surging gasoline prices last month drove the rate of U.S. inflation to a nearly 41-year peak of 9.1%, offering little hope of help soon for Americans suffering from a high cost of living.

The consumer price index jumped 1.3% last month to mark the third time in the last four months it’s topped 1%. Economists polled by The Wall Street Journal had forecast a 1.1% advance.

The increase in inflation over the past year rose to 9.1% to 8.6%. The last time inflation was so high was in November 1981.

But there is some real credible reasons NOT to panic:

Why? Digging deeper into the data on inflation reveals that while the situation is worrying, there are some reasons for optimism.

1. Core inflation. Annual core inflation, which strips out volatile food and energy prices, appears to have peaked in March.

Core inflation fell to 5.9% in May and could continue to drop should consumer demand for goods continue to soften, as shoppers balk at high prices and redirect their income towards services like dining out.

2. Oil prices. Concerns about a recession have sort of dimmed because of the drop in gasoline prices in the United States this month.

The average price for a gallon of regular gas on Wednesday was $4.63, compared to $4.78 a week ago and $5.01 one month ago.

3. Long-term inflation expectations. A survey from the Federal Reserve Bank of New York published this week showed that while consumer inflation expectations for the next year marked a new high in June, expectations for the medium and long term declined.

This indicates that American consumers still have faith that the Fed can get the inflation situation under control by hiking interest rates and ending crisis-era bond purchases.

The economy might slow, but price stability will ultimately be restored.

 

 

Categories: Good Morning San Diego, KUSI