Inflation – My 4 Step Guide
Here’s my 4 step video guide to understanding Inflation, including what it is, why it’s gone up, what the impact on you is and if it’s here to stay.
Here’s my 4 step video guide to understanding Inflation, including what it is, why it’s gone up, what the impact on you is and if it’s here to stay.
Inflation was much higher than the market expected last week so in this article we will consider:
Inflation in April accelerated at its fastest pace in more than 12 years as the U.S. economic recovery kicked into gear and energy prices jumped higher, the Labor Department reported Wednesday.
The Consumer Price Index, which measures a basket of goods as well as energy and housing costs, rose 4.2% from a year earlier. A Dow Jones survey had expected a 3.6% increase. The month-to-month gain was 0.8%, against the expected 0.2%.
Excluding volatile food and energy prices, the core CPI increased 3% from the same period in 2020 and 0.9% on a monthly basis. The respective estimates were 2.3% and 0.3%.
The increase in the annual headline CPI rate was the fastest since September 2008, while the monthly gain in core inflation was the largest since 1981.
Are You Sleepwalking Into Poverty?
Energy prices overall jumped 25% from a year earlier, including a 49.6% increase for gasoline and 37.3% for fuel oil. That came even though most energy categories saw a decline in April.
Prices at the pump, which fell 1.4% in April, have resumed their climb in May, with the national average eclipsing $3 a gallon for the first time since November 2014, according to AAA. Further rises are likely from Friday’s cyberattack that shut down Colonial Pipeline’s main transmission line from Houston to New Jersey.
Used car and truck prices, which are seen as a key inflation indicator, surged 21%, including a 10% increase in April alone. Shelter, another key CPI component, was up 2.1% year over year and 0.4% for the month.
In addition to rising prices, one of the main reasons for the big annual gain was because of base effects, meaning inflation was very low at this time in 2020 as the Covid pandemic caused a widespread shutdown of the U.S. economy. Year-over-year comparisons are going to be distorted for a few months because of the pandemic’s impact.
For that reason, Federal Reserve policymakers and many economists are dismissing the current round of numbers as transitory, with the expectation that inflation settles down later this year around the 2% range targeted by the central bank.
Fed officials repeatedly have said they will not raise interest rates or pull back on monthly bond purchases until inflation averages around 2% over an extended period.
“As the cyclically-sensitive components of CPI are still rising at a modest pace, we doubt this report will change the view of officials that inflationary pressures are ‘largely transitory,'”
“As the cyclically-sensitive components of CPI are still rising at a modest pace, we doubt this report will change the view of officials that inflationary pressures are ‘largely transitory,'” wrote Michael Pearce, senior U.S. economist at Capital Economics. “It’s just that there’s a lot more ‘transitory’ than they were expecting.”
Stock market futures briefly reached session lows after the release of the CPI numbers and pointed to a negative open on Wall Street. Government bond yields were mostly higher.
Price surges also have come amid supply bottlenecks caused by a number of factors, from production issues with the ubiquitous semiconductors found in electronics products to the Suez Canal blockage in March to soaring demand for a variety of commodities.
Lumber prices alone have risen 124% in 2021 amid persistent demand for building materials. Copper, often seen as a proxy for economic activity, has jumped nearly 36%.
We all know that dealing with financial consultants in Dubai can seem extremely daunting at first, but with the right advice and structure put in place, you can save for future.
Adrian Cartwright ACSI | Financial Consultant Dubai | Dubai Marina
WhatsApp: +971 52 855 7084
CISI Membership Number: 182193 | CII-Ref: M/505/1318
Located in Dubai, Adrian Cartwright FNCSA, represents clients throughout the United Arab Emirates, including, but not limited to the cities of Dubai, Abu Dhabi, Sharjah, Ras Al Khaimah, Fujarah, Um Al Quain, Ajman.
DISCLAIMER
The information contained in this website is for general information purposes only. The information is provided by Adrian Cartwright and while he endeavours to keep the information up to date and correct, he makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
© 2024 Adrian Cartwright – Financial Advisor Dubai
Web Design Dubai by Search Shack | Privacy Policy
We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
Because these cookies are strictly necessary to deliver the website, you cannot refuse them without impacting how our site functions. You can block or delete them by changing your browser settings and force blocking all cookies on this website.
These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.
If you do not want that we track your visist to our site you can disable tracking in your browser here:
We also use different external services like Google Webfonts, Google Maps and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Vimeo and Youtube video embeds:
You can read about our cookies and privacy settings in detail on our Privacy Policy Page.
Privacy Policy