Let’s look at the Consumer Price Index that was released Wednesday by the Labor Department.
The report said inflation had its biggest monthly jump in almost four years for pricing. While the report said prices rose 2.5% annualized in January and is over the Federal Reserve’s 2% target level, this could lead to a March rate rise, which I still doubt given the reasons below.
Two quick points on this. Inflation for you and I is not good, although you would think it is since it’s the goal of the Fed. We should not strive or celebrate inflation. It cheapens our money, especially when wage growth is flat, like right now for most of America’s middle class.
Second point: This inflation is being imported because of the strong dollar. Crude oil prices are the major component to the inflation.
Look at it this way for the consumer. Retail sales climbed 0.4 percent, the Commerce Department also said on Wednesday. How can retail sales climb month over month in January with December being the holiday gift-giving month?
My take on this gem is that strapped consumers were giving gift cards to friends and family in order to take advantage of 70% off sales in January at many retailers.
Look at the news out of retail. Macy’s is closing stores and looking to sell the company. Bankruptcies in major chains are growing and major mall operators are buying struggling retail companies to keep their stores open a little longer.
No this inflation number is not to be celebrated for most Americans, since the stronger dollar had energy prices jump 4%, which was the largest jump of all the components measured in the CPI.
So your costs of heating your house and driving your car went up, while your wages stayed the same and this is a sign that the economy is doing well.
Don’t believe it for a second.