US CPI Figures released yesterday showed that prices again moved more than expected, up 0.9% last month after the 0.6% move in May, with the core metric, ex food and energy, also posting a 0.9% monthly spike (estimates were for 0.4%) On a year-on-year basis, CPI increased from 5% in May to 5.4% in June. Core CPI has increased 4.5% year-on-year—the highest rate since November 1991. One of the major drivers for the higher-than-expected figures was used car prices. Data showed the price of used cars and trucks rose by 10.5% between May and June alone, the biggest increase since it was first published in 1953. That meant secondhand cars were on average changing hands last month for 45% more than this time last year.
Shortly after the number, Fed President Daly downplayed the bigger than expected ‘pop’ adding that ‘Several months of this doesn't mean that it's not transitory’. We presume we will hear a similar message that the pickup in inflation is ‘largely’ transitory from Fed Chair Powell on Wednesday when he delivers his semi-annual monetary policy report to Congress. That would also be consistent with the June FOMC statement that noted ‘Inflation has risen, largely reflecting transitory factors’.
Also, the Bloomberg Pret Index that we have been following here at SSC has gone global, it now includes Pret sales from as far afield as Hong Kong and New York as well as continuing to monitor sales closer to home. Or maybe it has always been global, we just never noticed it. For reference, Pret is providing weekly data to Bloomberg about sales across major business hubs on an exclusive basis to offer one measure of how the cities are getting back to normal. The index is calculated against a baseline from January 2020, just before the Covid smacked the global economy between the eyes.
It seems that New York is lagging in its efforts to get city workers not only back to the office, but maybe losing them full stop to the allure of quieter neighbourhoods or the lower tax states. As it stands, in New York downtown business volume is just under 30% of what it was before the pandemic, whilst midtown is 37%. Hong Kong’s Pret’s are faring much better, trading at 83% of their pre-pandemic levels, whilst the City of London and Canary Wharf is around 52%. The outperformer is still London suburbs, selling at 106%.