Inflation! Debasement! June edition

hyperinflation

Hyperinflation-era German currency

Source: Flikr Creative Commons

It’s time for the June edition of the inflation! debasement! update.  Speaker of the House Paul Ryan warned that, no matter what the data tell us, accelerating inflation and a depreciating currency are just around the corner.  Here are the latest data through June 2016:

  • Inflation: same 12-month rate as in May, April and March.  Prices overall rose 1.0 percent since June 2015, with annual inflation   If we exclude food and energy prices, the Consumer Price Index rose 2.3 percent over the past twelve months, just about the same as in April and May. Producer prices rose a bit faster but there are no signs of accelerating inflation in either data source.
  • Debasement: The dollar continued to appreciate, rising about 0.5 percent in the past month and a bit more than 5 percent according to the real trade-weighted exchange rate.

The real earnings release continues to disappoint.  The inflation-adjusted average wage rose 1.5 percent from June 2015 to June 2016, about the same as in April and May.  The long-term trend in productivity and real wage growth is roughly 2% or more, but since labor productivity seems to be growing at a less than 1 percent rate we’re doing about as well we can expect.

Remember: Stay vigilant!