Tomorrow, at 8:30 a.m., the U.S. Bureau of Labor Statistics will release the inflation numbers for the month of June. No one knows exactly what those numbers will be, but most economy-watchers expect they will be bad. Last month inflation was 8.6 percent; the Fed consensus projection is 8.8 percent, and economists polled by Reuters are forecasting annual inflation of 8.7 percent.
Yesterday, White House press secretary Karine Jean-Pierre hinted that the White House expects bad numbers as well:
So, on Wednesday, we will have new CPI inflation data, and we expect the headline number, which includes gas and food, to be highly elevated, mainly because gas prices were so elevated in June.
Gas and food prices continue to be heavily impacted by the war in Ukraine. And there are a few important points to keep in mind when we get this backwards-looking data.
First, June CPI data is already out of date because energy prices have come down substantially this month and are expected to fall further.
The average retail price of gas was 11 percent higher in June than it was in May. And the cost of gas in July is already down 7 percent from the June peak.
I have a chart here for you guys to — to see. The crude oil is the yellow. I’m sorry, the crude oil is the blue at the bottom, and the retail gasoline price is at the top. And you can see the difference there.
First, all data is “backwards-looking data.” There’s no such thing as “forwards-looking data.” That sort of thing is called a “projection,” which is a (hopefully) educated guess at what’s going to happen next.
Yes, gas and food prices globally are higher because of Russia’s invasion of Ukraine, but even Joe Biden was talking about high gas prices in November, well before Russia invaded Ukraine.
And while it is nice to see gas prices down that 7 percent or so, the national average price for a gallon of regular is now $4.65 — better than the $5.01 in mid-June, but still quite high by historical standards.
The inflation numbers for June are probably going to be terrible. (No wonder the president wanted to get out of town when they’re announced; Biden will be overseas, in Israel, Wednesday.) The numbers for July probably won’t be that good either, and don’t get your hopes too high for August. Once it starts, high inflation is difficult to get under control.