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- Jeff Gundlach said US inflation is concerning him, and may be rising faster than it appears.
- The DoubleLine Capital CEO described the past two months' CPI readings as "disturbingly" elevated.
- Gundlach has criticized the Consumer Price Index for understating the rate of inflation.
- See more stories on Insider's business page.
Billionaire investor Jeff Gundlach rang the inflation alarm on Wednesday, warning that US prices are rising worryingly fast and official estimates are understating the rate of increase.
"When it comes to measures of inflation, I define disturbingly 'up' as anything more than 4% on a sustained basis," the DoubleLine Capital boss tweeted.
"Right now we are at 5.4% Year over Year CPI inflation for a second month in a row," he continued. "And it is not probably, but provably, understated."
Gundlach tweeted after the Consumer Price Index jumped 5.4% in the 12 months to July, matching its increase in the year to June, which was the biggest gain since August 2008.
However, the index rose only 0.5% in July compared with 0.9% in June, which was the fastest rate since 1982.
Gundlach, whose nickname is the "Bond King," has been warning since last year that expansionary monetary and fiscal policies, coupled with supply constraints, would accelerate inflation. He's also questioned whether recent price increases will prove transitory if stimulus continues.
The investor is also concerned that inflation could be a bigger problem than it appears. He described CPI as "kind of a false construct" in a Yahoo Finance interview in May, as it tracks house prices using "owners equivalent rent" instead of the median house price, which has risen many times faster in recent months.
Gundlach has also cautioned that if inflation persists and the US federal government is forced to rein in its fiscal and monetary stimulus, stocks could tumble as their current valuations are partly a product of rock-bottom interest rates.