Good News and Bad News on Inflation
Inflation data was mixed this week, but signs indicate consumers are balking at higher prices.
While on balance the economic news was negative this week, markets rallied on yet another potential resolution to the Greek debt issue and a new funding mechanism for European banks utilizing U.S. dollars. I still don't think we have come close to hearing the end of this issue, but after weeks of poor stock market performance, the market was ready for some good news.
On the economic front, retail sales were basically flat at least partially due to Hurricane Irene and continuing supply chain issues with Japanese auto suppliers. The Consumer Price Index jumped more than expected, potentially putting consumers in the hole for at least a couple of more months. As I discuss below, consumers continue to rebel against most price increases. I believe that the news on inflation will be better in the months ahead.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.