July 14, 2022

Inflation was ‘hotter than expected’ says NAFCU Chief Economist

Data FlashOn a seasonally-adjusted basis, overall consumer prices rose 1.3 percent in June, with the Bureau of Labor Statistics reporting that the overall consumer price index (CPI) grew by 9 percent year-over-year. NAFCU Chief Economist and Vice President of Research Curt Long analyzed the data in a new Macro Data Flash report.

“Year-over-year price growth accelerated to a 40-year record high,” stated Long. “Energy was a key contributor, with energy prices increasing by 7.5 percent during the month.” From a year ago, energy prices were up 41.5 percent, whereas food prices rose 10.4 percent.

Core prices (excluding food and energy costs) rose by 0.7 percent compared to the previous month. Year-over-year core CPI growth was 5.9 percent.

“Looking forward, the recent drop in gas prices gives reason to believe growth in energy prices may slow in July,” added Long. “Inventory glut continues to plague retailers like Walmart, which had inventory-moving price cuts already in place going into July, and announced it would not have an event to compete with Amazon Prime Day this year.”

Long also noted that although the housing market has cooled with the rise in ­mortgage rates, the “CPI’s approach effects a lag between spot prices in the market and its shelter index,” and that even as rent declined according to several sources, the rent index still accelerated to 0.8 percent growth in June.  

“There are reasons to think price growth may be slowing in July… but the Fed is focused on actual inflation data, not conjecture,” concluded Long. “The June data leaves no doubt that the FOMC will raise the target federal funds rate by 75 basis points later this month and even puts a 100 basis point hike on the table.”

For more up-to-date economic insights from NAFCU's award-winning research team, view NAFCU's Macro Data Flash reports