Alex Demolitor
Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
by Alex Demolitor | Sep 11, 2024 | Monthly CPI Updates
The August 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, matching July’s 0.2% rise. These data were released at 8:30 am EST on Wednesday, September 11, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.5%, down from July’s 2.9% and June’s 3.0% prints. It was the smallest Y-o-Y increase since February 2021.
Adding more merit to the rate-cut argument, most of the CPI metrics matched economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents August’s figures, while the right column represents forecasters’ expectations. As you can see, the monthly core CPI (marked in green) was stronger than expected, while the others (marked in black) met expectations.
As the financial market’s worst-kept secret, the Federal Open Market Committee (FOMC) is widely expected to cut interest rates on Sep. 18. Chairman Jerome Powell said during his annual Jackson Hole Economic Symposium speech on Aug. 23:
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.
“We will do everything we can to support a strong labor market as we make further progress toward price stability. With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2 percent inflation while maintaining a strong labor market. The current level of our policy rate gives us ample room to respond to any risks we may face.”
Thus, while investors debate whether Powell will opt for a 25 or 50 basis point rate cut, the future direction of the U.S. interest rates has become abundantly clear.
Global stock markets largely declined after the CPI release, as volatility has increased in recent weeks. Conversely, Treasury bonds, precious metals, and the U.S. dollar exhibited mixed performances.
August’s headline inflation deceleration was driven by lower utility gas prices (-1.9%), fuel oil (-1.9%), and used cars and trucks (-1.0%). Core inflation (which excludes the impacts of food and energy), rose by 0.3% in August, up from 0.2% in July, and 0.1% in June. The shelter index rose by 0.5% (up from 0.4% in July) and the BLS described the jump as “the main factor in the all items increase.”
Food Prices
The food index increased by 0.1% in August, a deceleration from June and July’s 0.2% prints. Two of the six major grocery store food indexes showcased inflation, while four realized deflation.
- Cereals and bakery products (-0.1%)
- Meats, poultry, fish, and eggs (+0.8%)
- Dairy and related products (+0.5%)
- Fruits and vegetables (-0.2%)
- Nonalcoholic beverages (-0.7%)
- Other food at home (-0.3%)
In addition, the food away from home index rose by 0.3% in August, ahead of July’s 0.2% rise, meaning restaurants continue to increase their menu prices.
Energy Prices
The energy index declined by 0.8% in August after experiencing a flat performance in July. Electricity and natural gas prices slumped by 0.7% and 1.9%, respectively, while gasoline prices dropped by 0.6% excluding seasonal adjustments.
Core CPI August 2024
The August core CPI rose by 0.3% month-over-month and 3.2% Y-o-Y. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.5%) [July: +0.4%]
- Rent index: (+0.4%) [July: +0.5%]
- Owners’ equivalent rent: (+0.5%) [July: +0.4%]
- Motor vehicle insurance: (+0.6%) [July: +1.2%]
- Medical care services: (-0.1%) [July: -0.3%]
- Physician services: (+0.0%) [July: +0.1%]
- Hospital services: (NA) [July: -1.1%]
- Airline fares: (+3.9%) [July: -1.6%]
Seasonally Unadjusted CPI Data for August 2024
Before seasonal adjustments, the CPI-U for August 2024 increased by 2.5% Y-o-Y, rising to an index level of 314.796. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
25 or 50?
With investors’ anxiety on full display since August, the debate has shifted from battling inflation to avoiding a recession. Some market participants believe the FOMC is ‘behind the curve,’ meaning that interest rates have been too high for too long and the committee can’t avoid an economic slowdown.
The latest U.S. Job Openings and Labor Turnover Survey (JOLTS) showcases a material decline in employment opportunities, which highlights Powell’s point that “upside risks to inflation have diminished, and the downside risks to employment have increased.”
Therefore, while the debate between a 25 or 50 basis point rate cut should intensify over the next several days, only time will tell if the recent deceleration is a growth scare or something more ominous.
Overall, risk assets have suffered recently, and 2024 winners like Bitcoin, Ethereum, gold, silver, and U.S. stocks have pulled back from their recent highs. However, global central banks have piled into the yellow metal, and the World Gold Council noted on Jul. 30, “Combined with Q1 net purchases, central bank gold demand in H1 totaled 483t, the highest first half year in our data series.” As a result, physical demand for bullion remains robust.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Aug 14, 2024 | CPI, Monthly CPI Updates
The July 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.2% for the month, a rise from June’s 0.1% decline. These data were released at 8:30 am EST on Wednesday, August 14, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 2.9%, decelerating from June’s 3.0% Y-o-Y CPI print.
Doing little to derail the chances of future rate cuts, most of the CPI metrics matched economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents July’s figures, while the right column represents forecasters’ expectations. As you can see, the Y-o-Y CPI (marked in red) was weaker than expected, while the others (marked in black) met expectations.
To that point, while Fed Chairman Jerome Powell said on Jul. 31 that “we’re not quite at that point” where a lower overnight lending rate is justified, he added, “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate.”
Moreover, the FOMC’s latest Monetary Policy Statement noted that “The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance.” In other words, the FOMC has become more attentive to a slowing U.S. labor market, which may pave the way for less emphasis on inflation and foster monetary easing.
Global markets had a mixed response to the CPI release, with American and European indices largely remaining range-bound. Likewise, Treasury bonds, precious metals, and the U.S. dollar had mostly small reactions since the as-expected CPI data wasn’t much of a surprise.
July’s headline inflation deceleration was driven by lower used cars and trucks prices (-2.3%), utility gas (-0.7%), and apparel (-0.4%). Core inflation (which excludes the impacts of food and energy), rose 0.2% in July, a small increase from June’s 0.1% rise. The shelter index rose 0.4% and accounted for nearly 90% of the headline CPI’s rise.
Food Prices
The food index increased by 0.2% in July, matching the 0.2% print from June. Three of the six major grocery store food indexes showcased inflation, while three realized deflation.
- Cereals and bakery products (-0.5%)
- Meats, poultry, fish, and eggs (+0.7%)
- Dairy and related products (-0.2%)
- Fruits and vegetables (+0.8%)
- Nonalcoholic beverages (+0.5%)
- Other food at home (-0.5%)
In addition, the food away from home index rose by 0.2% in July, a noticeable slowdown from the 0.4% recorded in May and June. Consequently, restaurants pared back some of their pricing practices this month.
Energy Prices
The energy index was flat in July after falling 2.0% in June. Electricity and fuel oil prices rose by 0.1% and 0.9%, respectively, while natural gas prices fell by 0.7%. Gasoline prices were also flat in July on a seasonally adjusted basis and up by 0.8% excluding adjustments.
Core CPI July 2024
The July core CPI rose by 0.2% month-over-month, which is within the Fed’s range of expectations. On a Y-o-Y basis, the metric rose 3.2%. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.4%) [June: +0.2%]
- Rent index: (+0.5%) [June: +0.3%]
- Owners’ equivalent rent: (+0.4%) [June: +0.3%]
- Motor vehicle insurance: (+1.2%) [June: +0.9%]
- Medical care services: (-0.3%) [June: +0.2%]
- Physician services: (+0.1%) [June: +0.1%]
- Hospital services: (-1.1%) [June: +0.1%]
- Airline fares: (-1.6%) [June: -5.0%]
Seasonally Unadjusted CPI Data for July 2024
Before seasonal adjustments, the CPI-U for July 2024 increased (+2.9%) Y-o-Y, rising to an index level of 314.540. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Growth Concerns Overshadow Inflation?
Because price stability is only one-half of the Fed’s dual mandate, investors always worry that too much emphasis on inflation could slow economic growth and derail the other half of the dual mandate — maximum employment.
As a result, while the financial markets have stabilized in recent days, last week’s ‘flash crash’ and calls for emergency rate cuts highlight the anxiety that occurs alongside rate-cutting cycles. Historically, rate cuts have sometimes preceded recessions, so investors are looking for clues that a hard landing can be avoided. Thus, weaker data is good for financial assets as long as it’s not too weak.
Consequently, 2024 winners like Bitcoin and Ethereum have suffered recently, as have U.S. stocks. And while silver has fallen below the important $30 level, gold has largely maintained its strength. Therefore, the yellow metal has shown an ability to perform during good and bad periods throughout 2024.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Jul 11, 2024 | CPI
The June 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation declined by 0.1% for the month, a slight drop from May’s flat print (+0.0%). These data were released at 8:30 am EST on Thursday, July 11, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 3.0%, which is also a drop from May’s 3.3% Y-o-Y CPI reading.
Increasing the chances of a rate cut in the months ahead, the headline and core CPIs came in below economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents June’s figures, while the right column represents forecasters’ expectations. As you can see, the monthly and Y-o-Y CPIs (marked in red) were weaker than expected.
Yet, while U.S. Federal Reserve Chairman Jerome Powell said on Jul. 10 that “I do have some confidence” that inflation will return to 2%, he cautioned, “I am not ready to say” rate cuts are necessary. “There is a path to getting back to full price stability while keeping the unemployment rate low,” Powell added. “We’re on it. We’re very focused on staying on that path.”
Furthermore, with the U.S. presidential election scheduled for November, he reiterated, “Our undertaking is to make decisions when and as they need to be made, based on the data, the incoming data, the evolving outlook, and the balance of risks, and not in consideration of other factors, and that would include political factors.”
Thus, while Powell has to weigh several variables, June’s weak CPI print should have him feeling more confident about the FOMC’s projections.
Global markets had a mixed response to the CPI slowdown, with American and European indices gyrating, while Treasury bonds and precious metals rallied and the U.S. dollar slumped. Rate cuts by the Fed could help turn the tide for the CAD, which has underperformed the USD in recent months.
June’s headline inflation deceleration was driven by lower gasoline prices (-3.8%), used cars and trucks (-1.5%), electricity (-0.7%), and transportation services (-0.5%). Core inflation (which excludes the impacts of food and energy), rose 0.1% in June, the weakest monthly reading since August 2021. The shelter index rose 0.2%, with rents up 0.3%. Both were also the smallest increases since August 2021.
Source: Bureau of Labor Statistics
Food Prices
The food index increased by 0.2% in June after rising 0.1% in May. Tomatoes fell by 3.3%, breakfast cereal by 2.0%, while pork chops were up 3.1% and eggs up 3.5%. Four of the six major grocery store food indexes showcased inflation, while two realized deflation.
- Cereals and bakery products (-0.1%)
- Meats, poultry, fish, and eggs (+0.2%)
- Dairy and related products (+0.6%)
- Fruits and vegetables (-0.5%)
- Nonalcoholic beverages (+0.1%)
- Other food at home (+0.5%)
In addition, the food away from home index jumped 0.4% in June matching the results from May. Consequently, restaurants continue to demonstrate resilient pricing power.
Energy Prices
The energy index dropped 2.0% in June, on par with the 2.0% drop in May. Gasoline, electricity, and fuel oil prices fell by 3.8%, 0.7%, and 2.4%, respectively, while natural gas prices rose by 2.4%
Core CPI June 2024
The June core CPI rose by 0.1% month-over-month, the lowest monthly print in 2024. On a Y-o-Y basis, the metric rose 3.3%. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.2%) [May: +0.4%]
- Rent index: (+0.3%) [May: +0.4%]
- Owners’ equivalent rent: (+0.3%) [May: +0.4%]
- Motor vehicle insurance: (+0.9%) [May: -0.1%]
- Medical care services: (+0.2%) [May: +0.3%]
- Physician services: (+0.1%) [May: +0.0%]
- Hospital services: (+0.1%) [May: +0.5%]
- Airline fares: (-3.6%) [May: -5.0%]
Source: Bureau of Labor Statistics
Seasonally Unadjusted CPI Data for June 2024
Before seasonal adjustments, the CPI-U for June 2024 increased (+3.0%) Y-o-Y, rising to an index level of 314.175. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Source: Bureau of Labor Statistics
Gold and Silver Still Shining Bright
With the CPI slowdown suppressing Treasury yields and weakening the U.S. dollar, gold remains one of the best-performing assets in 2024. Similarly, silver has soared above $30 an ounce, reaching its highest level in more than a decade. Because precious metals futures contracts are priced in USD, a weaker greenback makes it more affordable for foreign investors to purchase the pair. As such, lower Treasury yields, a weaker dollar, and increased rate-cut enthusiasm create a profitable environment for precious metals enthusiasts.
However, the CPI release noted how gasoline prices declined by 3.6% and 3.8% in May and June. And with crude oil prices rising recently, they usually impact gasoline prices with a lag. As a result, the gasoline index should rise in July and temper some of the downward CPI momentum.
All in all, while 2024 winners like gold, silver, Bitcoin, and Ethereum should maintain their strength absent a recession, the same could be said for U.S. stocks. The S&P 500 and NASDAQ have also rallied sharply in 2024, but big tests loom over the next few weeks. With some of the index’s largest constituents — like Apple, Microsoft, and Meta Platforms — reporting earnings soon, investors expect upbeat results.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
by Alex Demolitor | Jul 8, 2024 | Debt Relief
If debt problems are mounting and pressure from creditors has become overwhelming, seeking professional help can ease the burden. Instead of forging the difficult path alone, strategizing with experts reduces the economic and psychological strain.
But, is Oak View Law Group the right partner to get you out of debt?
About the Company
- URL: https://www.ovlg.com/
- Phone: 1-800-530-6854
- Email: clientintake@ovlg.com
- Company HQ: Auburn, CA
- Trustpilot Reviews: 4.4/5 stars (15 reviews)
- Google Reviews: 4.4/5 stars (12 reviews)
- Better Business Bureau (BBB) Reviews: 4.7/5 (12 reviews)
Pros and Cons
For a quick breakdown of how Oak View Law Group stacks up, please see the list below:
Pros:
- Has helped more than 6,700 clients become debt-free
- Its team of experts has experience across 15 segments of consumer law
- There is a “No-Questions-Asked Refund Policy”
- Oak View Law Group provides professional guidance and mentorship throughout the debt-relief process
- Oak View Law Group can often settle your debts at 40% to 60% of the outstanding balance
- There are services for auto, medical, and student loan debt
- Highly rated by clients
Cons:
- Fees are federally regulated but can be high in some cases
What is Oak View Law Group?
Helping more than 6,700 clients become debt-free, Oak View Law Group is a consumer law firm headquartered in California. It specializes in debt relief, debt consolidation, and bankruptcy services. The group helps clients save money, avoid lawsuits, and has a team of experts with experience across 15 segments of consumer law. Moreover, Oak View Law Group has a “No-Questions-Asked Refund Policy,” where your fees and trust account balance are reimbursed if you’re unsatisfied with the service.
Some of Oak View Law Group’s services include:
- Debt Consolidation
- Debt Settlement
- Chapter 7 Bankruptcy
- Chapter 13 Bankruptcy
- Payday Loan Consolidation
- Payday Loan Settlement
For more insights on the value of these services, the Federal Trade Commission (FTC) has a helpful guide on How To Get Out of Debt.
How Can Oak View Law Group Help Me?
Working with a credit professional is like having an experienced coach to draw up plays on your behalf. And like any sport, it allows for a clearer strategy to achieve the team’s goals.
Oak View Law Group provides professional guidance, mentorship, and develops an effective debt-relief strategy, similar to a licensed insolvency trustee (LIT). Our partner site has an extensive guide on The Benefits of a LIT, which can help you determine if a consumer proposal or bankruptcy is the best strategy. Some of the differences include:
- You often forfeit more personal assets in bankruptcy
- Bankruptcy has a greater impact on your credit score
- An initial bankruptcy stays on your credit report for six years or more versus three years with a consumer proposal
For more information, please see our partner guide, What Is a Consumer Proposal in Canada and Who Is It For?
Similarly, Oak View Law Group provides parallel guidance to a LIT. By weighing the pros and cons of several scenarios, its team can help improve your financial health by achieving the following:
- Lower monthly payments and interest charges
- Devise a plan for manageable monthly payments
- Reduce or eliminate late fees
- Reduce or eliminate collection calls
What Is Oak View Law Group’s Settlement Program?
When working with Oak View Law Group, its team handles the day-to-day negotiations with creditors. For example, they manage creditor calls, negotiations, bill payments, and ensure you can enjoy your professional and personal lives with minimal disruption.
How Long Does It Take to Become Debt-Free?
Depending on the amount owed and your excess income, estimates can vary widely. In a nutshell: it often depends on how much funds you want to allocate to debt repayments.
For example, let’s say you have $10,000 in debt and Oak View Law Group negotiates a 50% settlement. You have to pay $5,000 and can choose a lump-sum payment or monthly installments.
The firm notes that “As per the industry trends and our experience, debt can be settled at 40% to 60%, but we always negotiate for the lowest settlement percentage possible to save more for our clients.”
Thus, if you can cut the collection amount in half by working Oak View Law Group, it should greatly enhance the speed at which you become debt-free.
What Does Oak View Law Group Charge In Fees?
Adhering to FTC guidelines, Oak View Law Group’s fees are outlined in the graphics below:
What Other Services Does Oak View Law Group Provide?
If you’re struggling with auto, medical, or student loan debt, Oak View Law Group can assist in these areas too.
- Regarding auto loans, the firm can help if the vehicle has been repossessed, sold, or is being processed by a third-party collection agency.
- For overdue medical bills, the firm notes that healthcare companies “do not provide settlement offers.” Consequently, Oak View Law Group can only help you negotiate a manageable repayment plan.
- Likewise, student loan companies do not provide settlement plans either, and Oak View Law Group can only help if the account has been transferred to collections.
How Do Clients Rate Oak View Law Group?
While the firm doesn’t have a lot of Google or Trustpilot reviews, the vast majority of clients were satisfied with Oak View Law Group’s services. Many cited efficient settlement procedures and noted how Oak View Law Group provided support and guidance throughout the process. A few of the testimonials read:
- Oak View Law Group was able to settle my huge payday loan debts. The staff were very helpful and understanding. I can’t believe how fast and easy they were able to settle my debt. Much respect to Oak View Law Group. Thank you for getting me out of debt.
- OVLG assisted me in resolving three payday loan debts. Mr Sanchez assured me that all debts would settled by the projected date and I would have access to himself, agents, and my account online. The process went just as planned, he communicated with me every step of the way and was patient to answer all my concerns. I would definitely return as well as recommend OVLG.
- I have worked with OVLG, specifically, Diego, and I cannot say enough good things that he and OVLG have done for me. They have helped me so much and are diligent, professional, and understanding. I am truly amazed at how quickly Diego replies. Great company, great assistance. They truly give you hope.
As a result, not only does Oak View Law Group develop strategies for effective debt relief, but it also shows empathy when dealing with difficult situations.
Are We Believers In Oak View Law Group?
Because client testimonials are the best indicator of distinguished service, Oak View Law Group’s reviews speak for themselves. By providing guidance, mentorship, and working with clients every step of the way, the firm has developed a compassionate reputation.
Moreover, if Oak View Law Group can negotiate debt settlements at 40% to 60% of the outstanding balance, the cost savings can greatly outweigh the service fees. On top of that, the “No-Questions-Asked Refund Policy” adds further credibility and reduces your risk if you’re unhappy with the process.
All in all, there is a lot to like about Oak View Law Group, and if your debts have become unmanageable, it may be the right firm for you.
If you want to learn more, visit: https://www.ovlg.com/
by Alex Demolitor | Jun 12, 2024 | Monthly CPI Updates
The May 2024 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation was flat for the month, coming in below April’s increase (+0.3%). These data were released at 8:30 am EST on Wednesday, June 12, 2024, by the Bureau of Labor Statistics. Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 3.3%, which is also a deceleration from April’s 3.4% Y-o-Y CPI reading.
Adding fuel to the rate-cut debate, the headline and core CPIs came in below economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents May’s figures, while the right column represents forecasters’ expectations. As you can see, the monthly and Y-o-Y CPIs (marked in red) were weaker than expected.
Furthermore, the Federal Open Market Committee (FOMC) releases its Monetary Policy Statement today at 2 p.m. ET. The group is widely expected to maintain the federal funds rate at its 5.25% to 5.5% range. However, Chairman Jerome Powell holds his press conference at 2:30 p.m. ET, and he should discuss the Committee’s projections and shed light on the path of interest rates in the months ahead. With U.S. government and consumer credit card debt at or near record highs, monetary easing would certainly help reduce the strain on low-income households.
Global markets lauded the CPI slowdown, with American and European indices climbing. Similarly, Treasury bonds and precious metals rallied as rate-cut expectations increased, while the U.S. dollar suffered as market participants adopted a more dovish outlook.
May’s headline inflation deceleration was driven by lower gasoline prices (-3.6%), utilities (-0.8%), new vehicles (-0.5%), and transportation services (-0.5%). Core inflation (which excludes the impacts of food and energy), rose 0.2% in May, the weakest monthly reading in 2024. The indexes for airline fares, new vehicles, communication, recreation, and apparel led the declines.
Source: Bureau of Labor Statistics
Food Prices
The food index increased by 0.1% in May after remaining flat in April. Uncooked poultry and beef roasts declined by 2.6% and 3.1%, respectively, while margarine fell by 2.7% and carbonated drinks sunk by 2.0%. Two of the six major grocery store food indexes showcased deflation, two were unchanged, and the other two increased.
- Cereals and bakery products (+0.2%)
- Meats, poultry, fish, and egg (+0.2%)
- Dairy and related products (-0.5%)
- Fruits and vegetables (+0.0%)
- Nonalcoholic beverages (-0.3%)
- Other food at home (+0.0%)
In addition, the food away from home index jumped 0.4% in May, outperforming the 0.3% increases from the previous two months. As a result, restaurants continue to demonstrate resilient pricing power.
Energy Prices
The energy index dropped 2.0% in May, a noticeable decline from April’s 1.1% rise. Gasoline and natural gas prices also fell by 3.6% and 0.8%, while the fuel oil index was down 0.4%. The index for electricity was flat in May.
Core CPI May 2024
The May core CPI rose by 0.2% month-over-month, the lowest monthly print in 2024. On a Y-o-Y basis, the metric rose +3.4%. Below is an itemized breakdown of the main price fluctuations seen in the core CPI reading:
- Shelter index: (+0.4%) [April: +0.4%]
- Rent index: (+0.4%) [April: +0.4%]
- Owners’ equivalent rent: (+0.4%) [April: +0.4%]
- Motor vehicle insurance: (-0.1%) [April: +1.8%]
- Medical care services: (+0.3%) [April: +0.4%]
- Physician services: (+0.0%) [April: +0.1%]
- Hospital services: (+0.5%) [April: +0.6%]
- Airline fares: (-3.6%) [April: -0.8%]
Source: Bureau of Labor Statistics
Seasonally Unadjusted CPI Data for May 2024
Before seasonal adjustments, the CPI-U for May 2024 increased (+3.3%) Y-o-Y, rising to an index level of 314.069. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Source: Bureau of Labor Statistics
Gold Bugs Rejoice
With the CPI slowdown supporting lower interest rates and a weaker U.S. dollar, gold has been one of the best-performing assets in 2024. Likewise, silver has really shined in recent weeks. Since precious metals futures contracts are priced in USD, a weaker greenback makes it more affordable for foreign investors to purchase the yellow metal. As such, lower Treasury yields, a weaker dollar, and increased rate-cut enthusiasm create a profitable environment for gold enthusiasts.
However, if other commodities exhibit similar strength, bullish bets on assets like oil, gasoline, food, lumber, etc. could increase inflation in the months ahead. Moreover, lower interest rates increase American’s disposable income, which could boost consumption during the summer months when economic activity is typically strong.
Thus, 2024 winners like gold, silver, Bitcoin, and Ethereum are betting that the Fed will find it difficult to tame inflation without causing a recession that sparks the next round of quantitating easing. In contrast, the S&P 500 and NASDAQ Composite have soared on hopes that inflation will fade and a soft landing will materialize. Only time will tell which team claims victory.
Are you thinking about diversifying into precious metals? Talk to your financial advisor about initiating a gold IRA account today, allowing you to invest in this red-hot asset on a tax-advantaged basis. Additionally, our complimentary CPI inflation calculator remains at your disposal, enabling you to assess inflation’s impact on your finances. Remember, seek the guidance of a financial advisor before making any investment decision.
