Inflation is defined as an increase in the general level of prices for goods and services and is measured by the Consumer Price Index, calculated every month by the U.S. Bureau of Labor Statistics.
Inflation in the United States has averaged around 3.3% from 1914 until recent times, but it reached an all-time high of 23.70% in June 1920 and a record low of -15.80% in June 1921. Most will remember the high inflation rates of the 70s and early 80s when inflation hovered around 6% and occasionally reached double-digits.
Consumer Price Index Continues Rising in 2021
On July 13th, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9% in June after rising 0.6% in May. Two things jump out in the data:
This was the largest 1-month change since June 2008 when the index rose 1.0%.
Over the last 12 months, the all items index increased 5.4% – the largest 12-month increase since a 5.4% increase for the period ending August 2008.
In addition, it was reported that:
The index for used cars and trucks continued to rise sharply, increasing 10.5% in June. This increase accounted for more than one-third of the seasonally adjusted all items increase.
The food index increased 0.8% in June, a larger increase than the 0.4% increase reported for May.
- The energy index increased 1.5% in June, with the gasoline index rising 2.5 % over the month.
Many of the same indexes continued to increase, including used cars and trucks, new vehicles, airline fares, and apparel. The index for medical care and the index for household furnishings and operations were among the few major component indexes which decreased in June.
Also of note: the all items index rose 5.4% for the 12 months ending June and has been trending up every month since January when the 12-month change was 1.4%.
The index for all items less food and energy rose 4.5% over the last 12-months, the largest 12- month increase since the period ending November 1991.
- The energy index rose 24.5% over the last 12- months.
Need to Buy a Car? Yikes.
The index for used cars and trucks rose sharply for the 3rd consecutive month, increasing 10.5% in June.
This was the largest monthly increase ever reported for the used cars and trucks index, which was first published in January 1953.
The index for new vehicles rose 2.0% in June and that is the largest 1-month increase since May 1981.
The motor vehicle insurance index increased 1.2% over the month.
Now, more than ever it's important to consult with a Certified Financial Planner™ about your investment and spending strategies. Taking into consideration risk tolerances is even more important with inflation trending up. Click below to find out your personal risk tolerance.