The annual reading has been skewed by “base effects” that were a result of prices falling at the onset of the pandemic. Core personal consumption expenditures, the Federal Reserve’s preferred inflation measure, rose 3.4% annually in May, the fastest since April 1992. Prices were up 0.5% on a monthly basis. The Federal Reserve, which will hold its July meeting on Wednesday, has called the price increases temporary, saying prices will at some point fall as supply chain issues caused by COVID-19 are resolved. Fed Chairman Jerome Powell has pointed to the price of lumber, which is now down 62% from its May 7 high, as evidence.
BIDEN DISMISSES INFLATION CONCERNS EVEN AS CONSUMER PRICES SURGE The $3.5 trillion in spending would add to the almost $6 trillion that has already been approved to support the economy through the COVID-19 pandemic. The package potentially will be paid for with tax increases on corporations and wealthy Americans.
“Government spending doesn’t stimulate the economy, it de-stimulates the economy and causes inflation,” said Stephen Moore, an economist at FreedomWorks who served as an economic adviser to former President Donald Trump. “We should be aggressively cutting government spending right now, not raising it.” Senate Democrats are currently drafting the human infrastructure package that they hope to ram through via budget reconciliation, a process that would allow them to pass the legislation with a simple majority rather than the 60 votes needed to avoid a Republican filibuster.
KIMBERLY-CLARK CUTS FORECAST AS INFLATION HEADWINDS INTENSIFY “The expectations are that the commodities will reach peak in the third quarter and then start to ease a bit as we get into the fourth quarter,” Kimberly-Clark CFO Maria Henry said on the company’s second-quarter conference call on Friday. Those companies expect to see inflation pressures last at least into year-end, if not longer.
Ticker Security Last Change Change % KMB KIMBERLY-CLARK CORP. 135.66 +0.71 +0.53%WHR WHIRLPOOL CORP. 219.52 +4.84 +2.25%PEP PEPSICO, INC. 157.18 +1.99 +1.28% However, inflation pressures have already caused a number of U.S. companies, including Kimberly-Clark. Corp., Whirlpool Corp. and PepsiCo Inc. to raise prices.
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