<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



As rapid inflation fuels growing recession fears, new data showed consumer prices rose 9.1% in the 12 months ending in June, hitting a worse-than-expected 40-year high after an unprecedented surge in gas prices.



<h2 class="wp-block-heading">KEY FACTS</h2>



Overall prices rose 1.3% from May—surpassing the 1.1% economists were expecting and much higher than the previous month’s increase of 1%, according to&nbsp;<a href="https://www.bls.gov/news.release/pdf/cpi.pdf" target="_blank" rel="noreferrer noopener">data</a>&nbsp;released by the Labor Department on Wednesday.



The unexpected jump marks the largest 12-month increase since the period ending November 1981, according to the release, and comes after prices in May unexpectedly returned to a 40-year high.



The worse-than-expected increase was the result of increases across categories, with gasoline, shelter and food being the largest contributors, the government said.



The energy index rose 7.5% over the month and contributed nearly half of the overall increase, driven higher by the gasoline index, which rose 11.2%.



Core inflation, which excludes volatile food and energy prices, rose 0.7% against an expectation of 0.5%; shelter prices rose at the fastest pace in 31 years while rent prices climbed at the largest rate in more than 35 years.



Stocks <a href="https://www.forbes.com/sites/sergeiklebnikov/2022/07/13/dow-falls-300-points-after-ugly-inflation-report-adds-to-recession-fears/">plunged</a> immediately after the report, with the Dow Jones Industrial Average paring pre-market gains and trading down 308 points by 8:45 a.m. ET.



<h2 class="wp-block-heading">KEY BACKGROUND</h2>



Rising energy prices have helped push inflation readings up to the highest level in decades during the pandemic, and stocks have struggled in recent months as Federal Reserve officials work to combat the surge by unwinding the central bank’s pandemic-era stimulus measures. After rising 27% in 2021, the benchmark S&amp;P 500 has tumbled 20% this year. Meanwhile, oil prices surged back toward yearly highs of more than $120 per barrel in June amid supply concerns over the summer travel season—adding to those spurred by&nbsp;<a href="https://www.forbes.com/sites/forbesstaffreports/2022/03/09/live-ukraine-russia/">sanctions</a>&nbsp;against Russia, one of the world’s top oil-producing countries. Prices have since fallen back below $100 per barrel this month, but experts&nbsp;<a href="https://finance.yahoo.com/news/oil-prices-should-find-a-lower-home-as-market-normalizes-says-analyst-194242256.html" target="_blank" rel="noreferrer noopener">aren’t</a>&nbsp;so sure how long the reprieve will last.&nbsp;



<h2 class="wp-block-heading">WHAT TO WATCH FOR</h2>



In a note to clients Sunday night, Goldman economists said they expect consumer prices to rise more quickly this summer as&nbsp;<a href="https://morningconsult.com/2022/05/25/public-transport-spending-inflation/" target="_blank" rel="noreferrer noopener">transportation</a>&nbsp;and&nbsp;<a href="https://www.barrons.com/articles/consumers-healthcare-costs-51655319960" target="_blank" rel="noreferrer noopener">health insurance</a>&nbsp;costs continue to surge, pushing core inflation from 5.9% in June to 6.3% in September. Some experts believe the price surge could last for years. “Consumers may have to live in a world where inflation consistently runs hotter than the previous decade,” LPL Financial chief economist Jeffrey Roach said in a note this month, citing concerns from central bankers like the European Union’s Christine Lagarde, who’s&nbsp;<a href="https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220628~754ac25107.en.html" target="_blank" rel="noreferrer noopener">warned</a>there are “growing signs”—including the ongoing war in Ukraine—that suggest “supply shocks hitting the economy could linger” beyond 2024.



<h2 class="wp-block-heading">FURTHER READING</h2>



<a href="http://www.forbes.com/sites/sergeiklebnikov/2022/07/13/dow-falls-300-points-after-ugly-inflation-report-adds-to-recession-fears/">Dow Falls 300 Points After ‘Ugly’ Inflation Report Adds To Recession Fears</a>(Forbes)



<a href="https://www.forbes.com/sites/jonathanponciano/2022/07/04/inflation-may-get-much-worse-this-summer-and-could-linger-many-years-experts-warn/">Inflation May Get Much Worse This Summer—And Could Linger ‘Many Years’—Experts Warn</a>&nbsp;(Forbes)



<a href="https://www.forbes.com/sites/jonathanponciano/2022/06/27/unemployment-will-rise-and-extreme-price-pressures-continue-as-fed-hikes-risk-recession-sp-warns/">Unemployment Will Rise And ‘Extreme’ Price Pressures Continue As Fed Hikes Risk Recession, S&amp;P Warns</a> (Forbes)



By Jonathan Ponciano, Forbes Staff

UK Fuel Pump Prices Experience Biggest Rise In 17 Years

Inflation Spiked 9.1% In June—Hitting New 40-Year High As Price Surge Fuels Recession Fears

The World Economic Forum (WEF) is the gold standard for every financial journalist. A long-haul flight from Johannesburg to Zurich and a short trainride later, we arrived in Davos, Switzerland, to the world’s biggest summit, ready to wire the views of influential business leaders to the world.
The big players of the global economy – from the deal-makers to the political powerhouses and movers and shakers – arrived in their smart suits to the summit’s alpine reaches, to discuss this year’s theme, A New Global Context. Here are some of the key takeaways from the Davos debates:
The European Central Bank’s bold announcement to pump in €60 billion in bonds every month to reignite growth took center stage. The world was officially in a new phase of global monetary policy divergence. The withdrawal of stimulus in the United States as the economy staggered back to its feet and this new development in Europe created interesting times for emerging markets.
In all our conversations with African leaders, what emerged was that despite the Ebola outbreak and terror attacks in some parts of the continent, Africa should still be every investor’s high-growth high-return destination. In fact, with the exception of the President of Guinea, African leaders dismissed both crises as inconsequential to Africa’s growth narrative. Displaying genius, the President of Guinea used his interview to bring the world in on the request he had made to Christine Lagarde, President of the International Monetary Fund: “Clear our debt so that we may have a fighting chance against Ebola.”
The small delegation from Nigeria, the continent’s biggest economy, did not go unnoticed. With an upcoming presidential election (mid-February), and in the midst of a tense domestic environment, this was somewhat understandable. What the forum lacked in Nigeria’s presence, South Africa more than made up for with a seven-member strong ministerial delegation. They were easily spotted in their long black coats and colorful flag-scarves. From the Finance Minister to the Governor of the Reserve Bank, the delegation put on a brave front tackling the energy crisis and lackluster take-off of the National Development Plan. The country’s public relations machine was spot on and it was evident members had clearly been put through their paces.
I couldn’t help but acknowledge that some of the delegates in attendance at Davos challenged my conventional definition of ‘world leaders’.
Also present were titans from the music world – from the legendary Andrea Bocelli to African songstress Angelique Kidjo and world-renowned hip hop producer Pharrel Williams. It was clear they were being recognized for their pulling power at such a forum.
Kidjo is credited with putting the African country of Benin on the map.
“If we want Africa to be top of mind for the world leaders here, Africans need to make Africa their priority,” she told me. Her passion for Africa’s development agenda pushed me to stretch my own perception of what leadership really is.
The small representation of women was difficult to ignore. One of this year’s co-chairs was Winfred Binyama, Executive Director, Oxfam. In an unapologetic, straight-talking style, she spoke about the world’s continued exclusion of women in positions of influence and power.
Binyama shared some of the highlights of Oxfam’s latest report saying it would take 80 years for women to balance the scales professionally with their male counterparts without the intervention of platforms like WEF.
I hope to return to Davos many more times. One can surely track at least this one indicator over a few years, but I certainly hope it’s not 80 years before we see that happening.

Tag: Global Economy

FORBES AFRICA SOCIAL MEDIA

Inflation Spiked 9.1% In June—Hitting New 40-Year High As Price Surge Fuels Recession Fears

EBOLA. TERRORISM. SO WHAT? COME TO AFRICA