Daily Market Color

New Inflation Data and The Potential Impacts

Inflation continues to run hot. The Bureau of Economic Analysis announced that the Personal Consumption Expenditures (PCE) price index increased 6.8% compared to last year and 1.0% compared to the previous month. It was the highest annual increase since January 1982 and the largest monthly increase since February 1981. The “core” index, which excludes food and energy and is a preferred inflation metric of the Federal Reserve, increased 4.8% compared to the same time last year.

Employee wages also stay high. The Labor Department reported that the Employment Cost Index, which tracks the total cost of labor for businesses, increased 5.1% compared to the same time period in 2021. It was the largest annual increase since the index’s inception twenty years ago in 2002. An uptick in labor costs is often a precursor to businesses raising prices on goods and services sold in the near future.

Jobs report coming next week. The Labor Department will release its monthly employment report next Friday. Other scheduled data releases include durable goods orders and the purchasing managers’ index (PMI).

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