Inflation… up record amount, but like all things now, it’s inconsistent

So… inflation.   With data released Wednesday, we get a sense of where we’re at.  

And it’s … not great.

The June inflation data is out, and it’s a 40-year-high, 9.1 higher in June than a year ago and 1.3 percent higher than in May.     That’s broad increases in food, energy, and housing.    Energy in particularly was up – 7.5 percent compared to May.  And, per the Washington Post, Economists now expect the Fed to raise interest rates by another 0.75 percentage point later this month, and there is the new talk of a whole one percentage point hike, which would be the largest one-time increase since the central bank began announcing rate hikes in the early 1990s. 

Of course, some data says it may be slowing.   According to the Personal Consumption Expenditures price index, core inflation strips out volatile food and energy prices that have decelerated for three straight months. Month-over-month price growth is also down from the levels seen early in the year.

And a piece in Computer Weekly titled “Gartner: Software sales defy economic outlook” highlights a Gartner prediction of an increase of 3% in IT spending in 2022.  

I’m going to keep calling this weird.    Best word I’ve figured out yet.

Rising energy costs will be the lead for businesses, and that impact will vary across industries.    One can hope the slowing nature of “everything else” inflation will continue to be good news for services businesses.    I think Gartner’s right, and don’t expect software spending to slow – although let’s note 3% isn’t gangbusters either.

What’s our takeaway?  Cautious optimism.    Plan for the worst, hope for the best and stay close to your customers.