It looks like the US consumer is struggling in the face of inflation. From Bloomberg:
The biggest increase in prices in almost three years eroded consumers' buying power, reinforcing speculation the Federal Reserve won't raise interest rates in the face of faster inflation and slow growth.
Consumer inflation in June climbed 0.8 percent, the most since September 2005, the Commerce Department said today in Washington. Spending increased 0.6 percent, more than forecast, compared with a gain of 0.8 percent the prior month...
The Fed's preferred gauge of prices, which excludes food and fuel, climbed 0.3 percent, more than economists forecast...
Adjusted for inflation, spending decreased 0.2 percent after rising 0.3 percent in May.
Inflation also made itself felt in the factory orders data.
A separate Commerce Department showed factory orders in the U.S. increased more than forecast in June, propelled by gains in petroleum and chemicals that reflected soaring prices. The 1.7 percent gain in bookings to $457.6 billion was the biggest jump this year, the report showed.
And inflation also showed up in eurozone producer prices. Bloomberg reports:
European producer prices rose the most in at least 18 years in June on soaring energy costs, sharpening the European Central Bank's dilemma over how to balance faster inflation and slowing economic growth.
The 8 percent increase from a year ago in factory prices in the 15 nations that use the euro was the biggest since the series began in 1990 and followed a 7.1 percent gain in May, the European Union statistics office in Luxembourg said today. Economists expected a 7.9 percent increase, according to the median of 27 forecasts in a Bloomberg News survey.
However, a peak in inflation may be in sight. From Bloomberg yesterday:
Plunging prices for cocoa, natural gas and sugar sent the Reuters/Jefferies CRB Index of 19 commodities to its biggest one-day decline since March.
The CRB index fell 3.4 percent to 401.98, which marks the largest slide since March 19. The gauge dropped to the lowest level since May 2 today, as did the UBS-Bloomberg Constant Maturity Commodity Index...
Crude oil lost as much as 4.5 percent to $119.50 a barrel on the Nymex, the first drop below $120 since May, amid speculation that Tropical Storm Eduoard won't cause disruption to most offshore oil facilities as it approaches the coast of Texas.