Check out inflation.
That $4-a-gallon gasoline really drives up consumer prices. The Consumer Price Index rose 0.6 percent in May, the largest increase since November. Year-over-year, consumer inflation was up 4.2 percent.
The so-called “core” index, which excludes food and energy, rose only 0.2 percent in May and 2.3 percent year-over-year.
But most consumers eat, drive and use heat or air conditioning. So soaring prices for energy and rising food prices — up 0.3 percent in May and 5.1 percent year-over-year — cut into what consumers can spend on clothes, home goods and other discretionary items.
It also could mute the impact of the tax rebates consumers are receiving.
“Consumers are spending more to buy food and energy,” Lindsey Piegza, market analyst at FTN Financial, said. “The tax rebate is just offering them a cushion. They are not buying wide-screen televisions.”
Also in the basket:
Anheuser in talks with Grupo Modelo (WSJ, subscription required)
Battling a bumpy road” economic downturn (WWD)
Higher price for Anheuser not a sure thing
Budweiser could pay price for being “America’s Beer”
(Photo: Reuters)
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