The Most Damning Inflation Figures Yet

Federal Reserve Chairman Jerome Powell testified before Congress this week, attempting once more to defend the indefensible.

But the numbers don't lie, and they're saying a lot right now.

In the 12 months through June, producer prices rose 7.3% — the biggest jump since annual numbers were first crunched back in November 2010.

In that same time, consumer prices rose 5.4%, topping May's 5% increase and notching the biggest annual gain since 2008.

Now, I know a lot of analysts (the Fed included) want to simply wave those figures away by saying year-over-year gains are distorted by low pandemic prices.

But that argument is quickly undone by the huge month-over-month price increases that have accompanied the greater inflationary surge.

That is, producer prices increased 1% from May to June of this year, continuing a trend in which prices are rising not just year-over-year but in real time.

The same is true of the CPI...

So I don't want to hear anymore about how inflation only looks so bad in light of the pandemic. Especially when you can see in the chart above that prices posted significant monthly gains last summer, in the face of the coronavirus.

Indeed, the notion that the pandemic caused the prices of goods and services to fall is another widely believed misnomer.

Prices hardly collapsed last year.

Food prices, for example, posted remarkable gains during the pandemic.

In 2020, food-at-home prices increased 3.5% and food-away-from-home prices 3.4%.

For context, the 20-year historical level of retail food price inflation is 2% per year — meaning the 2020 increase was 75% above average (almost double).

And food has only gotten more expensive since then, posting a 0.8% monthly increase in June and surging 2.4% higher than a year ago.

The price of meats, poultry, fish, and eggs rose 2.5% last month. Beef was up 4.5%, (its largest one-month increase since June 2020). And fruits and vegetables rose 0.7%.

The cost of dining out rose 0.7%, as well — a blistering pace not seen since 1981.

Gas prices jumped 2.5% from May to June while energy prices on the whole increased 1.5%.

Again, these are monthly increases, so it has nothing to do with the pandemic.

And if you're still not convinced of that, consider that consumer prices were 3% higher in June 2021 than they were in June 2019.

That's what makes all of this denialism so absurd.

It's gotten so bad that the Fed is even lying to itself at this point.

When Powell sat in front of lawmakers this week, he insisted that inflation was only significant among "a small group of goods and services directly tied to the reopening."

However, The Federal Reserve's survey of its 12 regional banks (called The Beige Book) described the price increases as "broad-based" and said "the majority" of the banks' business contacts "expected further increases in input costs and selling prices in the coming months."

That's hardly "isolated" or "transitory."

On the contrary, the inflationary evidence couldn't be more damning.

It's embedded at this point, and actually, prices are running much hotter than even the Fed's own collection of imperfect data reflects.

Of course, you know that.

I've been calling it for more than a year now.

That's why now I've gone even further with a special report on inflation-related investments that's designed specifically to save investors' fortunes.

More than that, actually, it's a road map to extreme inflationary profits — a collection of three inflation-proof stocks that are all but guaranteed to shoot higher alongside prices.

I'd highly recommend you check that out by clicking here.

There's no time to waste.

Fight on,

Jason Simpkins

@OCSimpkins on Twitter

Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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