07/11/18: Data released today by the U.S. Department of Labor indicate that U.S. inflation rates continued to increase during June, but to remain at manageable levels.

Specifically, the Department of Labor reported that its Producer Price Index for All Commodities rose by 5.5% during June, as compared to the same month a year ago, following a 5.4% year-over-year increase during May. That’s the biggest year-over-year increase in the Department’s Producer Price Index since February 2017.

U.S. Producer-Price-Index-All-Commodities-(06-18)

Additionally, the Department reported that its Producer Price Index for Manufactured Goods rose during June by the biggest year-over-year rate since December 2011, increasing by 5.8%, as compared to the same period a year ago.

U.S. Producer-Price-Index-Manufactured-Goods-(06-18)

On a positive note, the Department reported that its measure of inflation retail industries rose by only 2.2% during June, as compared to June of 2017, indicating that U.S. retailers have continued to absorb the majority of increases in producer prices instead of passing those price increases along to their customers.

Yet, on a negative note, our experience suggests that the Federal Reserve would continue to increase the target range for its overnight bank lending rate during the coming months in the event that prices of various types of goods at the producer stage of sales were to continue to trend higher. Such a development would likely lead to a peak in U.S. stock prices, in general, within the next six months.