U.S. inflation tops 9.0%: nothing here that ‘doesn’t indicate peak’

The S&P 500 index is down 2.0% on Wednesday after the U.S. Bureau of Labour Statistics said inflation climbed significantly to a new forty-year high of 9.1% in June.

Jim Cramer reacts to the CPI print

The Dow Jones estimate was for a narrower 8.8% year-over-year increase. Interestingly, however, Jim Cramer still doesn’t read the CPI print as very negative. Explaining why on CNBC’ “Squawk Box”, he said:

Commodities in food segment are down, energy has come down, used cars have come down, new vehicles are not going up and applications numbers [suggest] housing will come down too. There isn’t anything here that doesn’t indicate peak.

Core inflation, excluding food and energy, was up 5.9% in June versus a 5.7% increase expected. On a monthly basis, headline and core CPI went up 1.3% and 0.7%, respectively.

Cramer remains constructive on stocks

Since the CPI report tends to be backward looking, the Mad Money host sees “opportunity” in the U.S. equities in the red on Wednesday. He added:

[Don’t] look at these numbers in a vacuum. There’s been a tremendous decline since the Fed started tightening. It’s nothing like the Paul Volker era. This report was taken at the absolute height. Think about what’s happened since then.

Cramer, however, is still in favour of a 100 bps increase in interest rates. The U.S. central bank is scheduled for its next policy meeting on July 27th.

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