June 2016 Inflation

We continue down the road I fear this month.  Here are graphs of month over month and year over year inflation.

Rent inflation continues to strengthen at over 3% and core inflation outside of rent continues to revert back toward the 1% range.


And markets react with rising interest rates, due to expectations of Fed tightening.

Here is an excerpt from the Bloomberg article:

Steadying energy costs and the dissipating influence of the strong dollar will stoke price pressures more broadly and enable companies to regain the ability to charge their customers more. Faster inflation underpinned by an improving economy and a healthy job market would also enable the Fed to resume raising interest rates.

“We’re starting to see upward pressure on the inflation numbers,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd., said before the report. “It reinforces the case for the Fed to resume tightening, though they’re highly risk averse right now.”

We have low inflation because of the current tight monetary posture together with high rent inflation because of the current tight credit policy posture, and this is leading us to tighten both even more.  There is no housing market to kill this time.  If this does lead to a recession, it will probably be much shallower than the last one, maybe without much of a pullback in the stock market.  I don't know.  I'm looking at my calendar.  Looks like it's 1937.