By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, October 13, 2022

The Consumer Price Index for All Urban Consumers (CPI-U) excluding energy and food accelerated to a new four-decade high in September, hitting 8.2% above their year-earlier level. This is a rise of 0.4 percent in one month, on a seasonally adjusted basis after rising 0.1 percent in August, reported the U.S. Bureau of Labor Statistics today.

In June, the all items index had increased 9.1 percent, then hit 8.5% in July and 8.3% in August.

Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. These increases were partly offset by a 4.9-percent decline in the gasoline index. The food index continued to rise, increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The energy index fell 2.1 percent over the month as the gasoline index declined, but the natural gas and electricity indexes increased.

The index for all items less food and energy rose 0.6 percent in September, as it did in August. The indexes for shelter, medical care, motor vehicle insurance, new vehicles, household furnishings and operations, and education were among those that increased over the month. There were some indexes that declined in September, including those for used cars and trucks, apparel, and communication.

The all items index increased 8.2 percent for the 12 months ending September, a slightly smaller figure than the 8.3-percent increase for the period ending August. The all items less food and energy index rose 6.6 percent over the last 12 months. The energy index increased 19.8 percent for the 12 months ending September, a smaller increase than the 23.8-percent increase for the period ending August. The food index increased 11.2 percent over the last year.

This may be the peak of U.S. inflation. Some clues, such as the number of companies tempted to increase their prices in the coming months that is falling, or the decline in real estate prices that is underway, suggest this.

Markets anticipate a significant interest rate hike in November by the U.S. Federal Reserve.

The rise in interest rates, started by the Fed in March 2022, from zero to more than 3% to curb inflation (8.5% in July, 8.3% in August and 8.2% in September), is hurting everyone.

American savers are seeing their portfolios shrink (a 30% drop in Nasdaq stocks, a 25% drop in the S&P 500, and a 15% drop in U.S. Treasury bonds). American households are experiencing a doubling of mortgage rates (above 7%) and are preparing for a housing crash. Wall Street worries about a financial accident, such as the failure of an over-indebted private investor.

In addition, the partners of the United States are suffering from the soaring dollar and can no longer finance themselves, like the United Kingdom.

Investors now fear that the Fed’s strict rate policy will break economic growth and generate lasting recession. In time of recession and inflation, gold is the safe haven of wealth. Caught off guard, the U.S. central bank is trying to catch up and plans to raise rates to 4.25% by December. Too late, too strong, everyone is worried about a US recession, while growth has already been negative in the first two quarters. JPMorgan boss Jamie Dimon repeated Monday, October 10, his fears combined with the war in Ukraine: “These are very, very serious things that are likely to put the United States in a kind of recession in six to nine months,” predicted Mr. Dimon.

Read also : How to invest in gold

Today gold prices hit a high of $ 1,683.5 per troy ounce. This was $ 1,676 per troy ounce on September 30. Gold prices were navigating between $ 1,614 and $ 1,626 per troy ounce on September 28.

The yellow metal has always been a great hedge against inflation because it rises in price when the cost of living standards rises. Gold can store value efficiently, when paper currency loses purchasing power because of inflation.

The exchange rate of euro/dollar now is : 1.00 euro for 0.98 dollar

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© Copyright 2022 – Swann Collins, investor, writer and consultant in international affairs.