“U.S. inflation is above 9%, but it is the breadth of the price pressures that is really concerning for the Federal Reserve,” says James Knightley, chief economist at ING Economics. “With supply conditions showing little sign of improvement the onus is the on the Fed to hit the brakes via higher rates to allow demand to better match supply conditions. The recession threat is rising,” it adds.
Food prices are up 10% year-on-year (1% month-on-month). Our family of four weekly grocery bill at a military commissary is above $300, which means our four-person-family neighbors are probably close to $400. Gasoline was up 11.2% MoM (59.9% YoY), shelter, 0.6% MoM, apparel 0.8% MoM, used cars 1.6% MoM.
Knightley is “hopeful that this marks the peak for headline inflation,” but suspects “the descent will be slow given the ongoing upward pressure on food prices and the long time it takes for turning points in house price appreciation to feed through into the shelter components of CPI.”
What does this mean for bev/al? Maybe not much. Bev/al has always been viewed as an affordable luxury and notes that “people appear prepared to run down accumulated savings and pay higher prices to do things they missed out on over the past couple of years.”