The inflation rate is the most-talked-about indicator in the present-day world. As per the latest CPI US data, the world will again face a crisis due to another hike in the inflation rate. September witnessed inflation recently in the Chinese market. However, an unbelievable increment in the spending habits of the people in the months of Autumn ensured the maintenance of balance in the retail prices.
From August, the inflation rate started showing a rise of around 0.3%. The National Bureau of Statistics confirmed that Consumer Price Index has shown a rising trend of almost 2.8% in September. On the other hand, the CPI Inflation rate in the US market has reached a very high point. Moreover, the American market never went through such a hike in the past 41 years. This has resulted in a rise in the commodity market also.
The CPI index indicates that the prices of different commodities, like crude oil, gold, silver, etc., will face a huge increase. As a result, the demand for the same will also be affected very much. As the rate of interest goes upward, the stock market returns will also show a decline. So, such a scenario can explain well why most people are confronting a fall in the US stock market.
The demand for many commodities, however, increases due to their necessity for the production of certain goods. Therefore, the commodity market can benefit from this unexpected CPI inflation. But the growth in the inflation rate will affect the global economy negatively. The booming inflation also brings a lot of hurdles for investors in the stock market. Hence, the CPI data related to different commodities and securities ensure that the prices are rising at a high pace resulting in expensive commodities and low rates of returns.
In the past twelve months, the CPI index touched 296.81 points in September, the highest to date. On the contrary, the reports of 1950 will show you that it was only 23.50 points in February. A comparison will reveal that the 1950 CPI index was the lowest as huge inflation became common in the US market after that. From the previous month, the current rise is about 0.39%. Such a hike is affecting the world market also.
On the other hand, the Chinese Economy is reviving back to its old form after the COVID lockdowns and restrictions. Although inflation greatly engulfs the financial market, spending habits are saving the currency value from witnessing a bigger fall.
The US CPI index can be a positive indicator of the Economy’s overall performance. The rise over and above the target rate will increase the value of dollars against several currencies operating globally. The data is thus implying a low return for the stocks but a high performance for the Economy as a whole.