U.S. Inflation Reached 30-Year High in October As Consumer Prices Jump 6.2% - WSJ

  

Category:  News & Politics

Via:  vic-eldred  •  4 weeks ago  •  31 comments

By:   By Gwynn Guilford

U.S. Inflation Reached 30-Year High in October As Consumer Prices Jump 6.2% - WSJ
“I do think we’re moving into a new phase where inflation is broader and where things are going to get a little more intense,” she said. “Part of that reflects that [supply-chain] bottlenecks are not resolved going into the holiday season, when a lot of purchases get made, and that the economy is doing really well, so you have strong demand.”

S E E D E D   C O N T E N T



U.S. inflation hit a three-decade high in October—rising at a 6.2% annual rate—as pandemic-related supply shortages and continued strength in consumer demand continued to push up prices.

The Labor Department said  the consumer-price index , which measures what consumers pay for goods and services, increased at the fastest annual pace since 1990. Inflation also topped 5% for the fifth straight month.

The so-called core price index, which excludes the often-volatile categories of food and energy, in October climbed 4.6% from a year earlier, higher than September’s 4% rise and the largest increase since 1991.

On a monthly basis, the CPI increased a seasonally adjusted 0.9% in October from the prior month, a sharp acceleration from September’s 0.4% rise, and the same as June’s 0.9% pace.


Price increases were broad-based in October, with higher costs for new and used autos, energy, furniture, rent and medical care, the Labor Department said. Prices fell for airline fares and alcohol.

Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives, thinks the U.S. is entering a six-month period of unusually high inflation.

“I do think we’re moving into a new phase where inflation is broader and where things are going to get a little more intense,” she said. “Part of that reflects that [supply-chain] bottlenecks are not resolved going into the holiday season, when a lot of purchases get made, and that the economy is doing really well, so you have strong demand.”

Ms. Rosner-Warburton sees a shift under way in which a wider range of factors will push up inflation, as opposed to the previous months’ increases, which were driven disproportionately by skyrocketing vehicle prices and the reopening of services after Covid-19 vaccines became available. “Part of [this] still seems likely to be transitory, but maybe not all of it,” she said.

Federal Reserve officials are closely watching inflation measures to gauge whether the recent jump in prices will be temporary or lasting. One such factor is consumer expectations of future inflation, which can prove self-fulfilling as households are more likely to demand higher wages and accept higher prices in anticipation of higher future price growth.

Consumers’ median inflation expectation for three years from now stayed at 4.2% in October, the same as in September, according to a survey by the New York Fed. That level is the highest since the survey began in 2013.

Unusually high demand—boosted by a long stretch of government stimulus and an  improving job market —is a crucial factor driving higher inflation.

Consumer spending increased at an  annual rate of 1.6%  in the third quarter, a sharp slowdown from a 12% increase in the prior quarter. However, much of that deceleration was due to scarcity of new cars and other durable goods. Consumer spending on services last quarter climbed at the brisk annual rate of 7.9%.

Covid-19 continues to be a wild-card factor. The outbreak of the Delta variant put downward pressure at the end of the summer on prices for travel, recreation and other services that involve close interaction. Spending on services has bounced back in recent weeks as coronavirus infections fell, which could put further upward pressure on prices.

Companies are struggling to get materials and are delaying orders as elevated demand for goods due to pandemic spending habits has collided with transportation bottlenecks, production disruptions from Covid-19 and labor shortages. The most prominent example is a shortage of semiconductors that has hamstrung auto production. Limited supply of new autos has driven up prices for both new and used vehicles.

The chip shortage, which has also affected other industries, has worsened because of shutdowns of factories and ports in Asia in response to Covid-19 outbreaks.

Supply disruptions go far beyond the semiconductor shortage, creating scarcity for a range of materials affecting companies throughout the chain of production. A separate shortage of available workers is also affecting inflation and the overall economy, said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.

“The bigger picture is we’re likely to see inflation climb higher,” she said. “Things are going to get worse before they get better.”

Many companies are passing on higher costs to consumers. In October some 53% of small businesses raised prices, on net—a level last seen in the early 1980s—according to the National Federation of Independent Business, a trade association.

The shortage of workers to meet consumer demand is also putting upward pressure on wages, pushing companies to raise prices to offset higher labor costs. The sharp uptick in restaurant prices during the past few months is a sign of this pass-through from wages into higher prices, economists say. That dynamic  is increasingly showing up  in other sectors.

Higher food and  energy prices —driven up by pandemic-related production problems as well as by weather and geopolitical factors—are also adding to the upward pressure on inflation, said Richard F. Moody, chief economist at Regions Financial Corp.

“All these things are being rolled into prices we pay at the grocery store,” he said.

The relentless and rapid rise in prices throughout the economy has left companies scrambling to keep up.

Tom McTaggart, a pricing consultant and the founder of PricingAudit.com, said he began sensing a sustained rise in supply-chain-driven inflation during the summer. His billable hours had surpassed those for all of 2020, itself a record-breaking year for his business. Demand for his services has surged as his clients have struggled to preserve their margins.

“It’s a never-ending loop—by the time you’ve implemented one price increase, you’re already ready to implement a new one,” said Mr. McTaggart, who is based in Philadelphia. “It’s like trying to hit a moving target while you’re standing on a moving platform.”

Mr. McTaggart said firms are slammed by business from existing customers and have no spare capacity to try to gain market share from rivals, something firms sometimes can do during periods of high demand. He added his clients’ accounting systems aren’t designed to update such a range of rapidly rising costs. And since it can take a while for these price changes to trickle through the supply chain to the consumer, Mr. McTaggart expects there will be more pressure on consumer prices to come.

“The kind of price increases I do take time to flow through to consumers—color that goes into tubes, or the wire that goes into a dishwasher,” he said. “It’s almost like a wave—it could take a year to get to the end consumer.”

Economists generally expect upward pressure on inflation from supply constraints to fade over the next year as consumer demand for goods eases, production ramps up and sidelined workers return. However, they also anticipate those to be replaced by sources of price pressure such as rent and medical care that tend to be more persistent—and that therefore are key to anticipating inflation’s future path. Rent is particularly important because it accounts for nearly one-third of the CPI. After remaining subdued for most of this and last year, rental costs have started to accelerate.


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Vic Eldred
Professor Principal
1  seeder  Vic Eldred    4 weeks ago

The new report raises questions about claims by Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen who told us that inflation would be transitory and related to the COVID-19 pandemic.

 
 
 
Moose Knuckle
Freshman Participates
2  Moose Knuckle    4 weeks ago

The inflation is by design, to eliminate the middle class so we can be easily manipulated and controlled by the Red Fascist commies.

 
 
 
Vic Eldred
Professor Principal
2.1  seeder  Vic Eldred  replied to  Moose Knuckle @2    4 weeks ago

Could be....I'm sure the high heating cost we will be facing in the northeast will = go get solar panels.  The high gas prices are to remind people to buy electric cars...etc.  Ya, it could all be a screw America policy. They want the country to go green so maybe they view the inflation as an ally?  Who knows?  These are radicals running the Biden administration.

 
 
 
Snuffy
Junior Quiet
2.1.1  Snuffy  replied to  Vic Eldred @2.1    4 weeks ago

I was thinking that could be part of the rational for it all.  Don't know if you guys caught it, but Kerry gave a speech at the Climate Summit in Glasgow where he stated that coal burning generation stations would be gone in the US by 2030.  While an ambitious goal, and willing to admit that burning coal does have a great impact on greenhouse gas generation, is that part of an idea to raise energy prices so high so fast that people start to turn to "green" energy (solar panels on their roofs,  etc) because the price is now more in line with traditional energy costs? After all, that's been part of the delay in moving towards a greener economy is the higher cost of green energy as compared to traditional fossil fuel generated energy.  I don't know, just a guess on my part. But it seems to me a hard push to green energy won't work unless you can convince the population to move along with it and a lot of people vote with their pocketbooks... 

 
 
 
Vic Eldred
Professor Principal
2.1.2  seeder  Vic Eldred  replied to  Snuffy @2.1.1    4 weeks ago
I was thinking that could be part of the rational for it all.  Don't know if you guys caught it, but Kerry gave a speech at the Climate Summit in Glasgow where he stated that coal burning generation stations would be gone in the US by 2030.  While an ambitious goal, and willing to admit that burning coal does have a great impact on greenhouse gas generation, is that part of an idea to raise energy prices so high so fast that people start to turn to "green" energy (solar panels on their roofs,  etc) because the price is now more in line with traditional energy costs?

Good point and we do know that the Biden administration is considering shutting down another pipeline. That is only going to lead to higher fuel prices. So, that leads us right back to the reasoning behind it.


 After all, that's been part of the delay in moving towards a greener economy is the higher cost of green energy as compared to traditional fossil fuel generated energy.  I don't know, just a guess on my part. But it seems to me a hard push to green energy won't work unless you can convince the population to move along with it and a lot of people vote with their pocketbooks... 

This would be the painful hard push. One of the few rational explanations.

 
 
 
Ronin2
PhD Quiet
2.1.3  Ronin2  replied to  Vic Eldred @2.1    4 weeks ago

That is if you can find the solar panels, electric cars, etc. Shortages are affecting the availability of all things green as well. If you do manage to find them expect to pay far more than you should due to inflation.

I am sure the administration is expecting everyone to go out and try to get them; and if they can't find them- well they should just quit their jobs to avoid high fuel prices; layer up and shut off the heat and electricity at home; and wait for big government to come and take care of all of their needs. Assuming that big government knows about their problems; or even cares.

 
 
 
Nowhere Man
Junior Participates
2.1.4  Nowhere Man  replied to  Vic Eldred @2.1.2    4 weeks ago
Good point and we do know that the Biden administration is considering shutting down another pipeline. That is only going to lead to higher fuel prices. So, that leads us right back to the reasoning behind it.

It harkens back to Obama's energy policy, if we remember the history, he was wanting to push gasoline to over 5 bucks a gallon... and at the same time pushing solar energy and electric cars.... (remember the solyndra debacle) And what about Beacon Power and their government guaranteed loan that will never be repaid?

Then we have Governor Inslee of Washington (an Al Gore disciple) saying the pandemic and the economic crisis that liberal policies have created over it is the perfect opportunity to push the global warming (and progressive political) agenda.... (and using his absolute dictatorial emergency powers to deepen the crisis and just about every government agency to enforce his edicts)

There is no doubt, while they have power they will try and force their agenda down Americas throat, as they say the majority rules and to hell with what anyone else thinks, democracy in action...

Remember all the regrets when they had full control of the government in Obama's first two years? all they could come up with was Obamacare? the laments over the opportunity lost to force thru other parts of the agenda like gun control?

The agenda is clear, no question about it, and it isn't that they care about the citizens.... Heck they just fired thousands of government employees over vax mandates, and proudly bragged on how the government is now 95%+ vaccinated... (they raised the percentage from 75% to 96% overnight by firing everyone that refused)

So much for caring about people....

 
 
 
Vic Eldred
Professor Principal
2.1.5  seeder  Vic Eldred  replied to  Ronin2 @2.1.3    4 weeks ago

Creating a shortage would lead to market ingenuity (the part of US History, that is seldom taught) and then the climate zealots will get us to where they want us to go. It's going to be painful, unless you are living a sheltered life on Martha's Vineyard.

 
 
 
Sparty On
PhD Principal
2.1.6  Sparty On  replied to  Ronin2 @2.1.3    4 weeks ago

Yeah, even if they were available good luck getting them installed before summer of 2022

Wait until people start getting their natural gas and propane bills if they didn't lock in pricing.

It's going to be ugly.   I locked mine in in June.   Spot prices have already increased over 70% in that time.   That could double again if something isn't done.

 
 
 
Vic Eldred
Professor Principal
2.1.7  seeder  Vic Eldred  replied to  Nowhere Man @2.1.4    4 weeks ago
Heck they just fired thousands of government employees over vax mandates,

And the reasoning behind that?  There can only be one - Biden promised to defeat covid. He needs to fulfill at least one promise.

 
 
 
Nowhere Man
Junior Participates
2.1.8  Nowhere Man  replied to  Vic Eldred @2.1.7    4 weeks ago
And the reasoning behind that?

Look at it another way, they just purged most of the people from government that can and do think for themselves....

Where have we seen that in history before?

Remember Biden saying on National TV, "we are coming for you, we are tired of waiting".....

 
 
 
Vic Eldred
Professor Principal
2.1.9  seeder  Vic Eldred  replied to  Nowhere Man @2.1.8    4 weeks ago
Where have we seen that in history before?

I don't dare say it!


Remember Biden saying on National TV, "we are coming for you, we are tired of waiting".....

It was chilling!

 
 
 
Nowhere Man
Junior Participates
2.1.10  Nowhere Man  replied to  Vic Eldred @2.1.9    4 weeks ago
It was chilling!

Yeah, the malevolence in his affect, manner and voice was damned chilling....

 
 
 
Tessylo
Professor Principal
2.1.11  Tessylo  replied to  Nowhere Man @2.1.10    4 weeks ago
Yeah, the malevolence in his affect, manner and voice was damned chilling....

jrSmiley_80_smiley_image.gif

 
 
 
Jack_TX
Junior Quiet
2.1.12  Jack_TX  replied to  Vic Eldred @2.1.7    4 weeks ago
And the reasoning behind that?  There can only be one - Biden promised to defeat covid. He needs to fulfill at least one promise.

He doesn't. 

It really doesn't matter what he does, he's not going to get re-elected in his health.  I don't think he'll run.

All he needs to do to be considered a successful president is calm everything down, be slow and methodical, and do a few minor things that everybody agrees on anyway.

 
 
 
Vic Eldred
Professor Principal
3  seeder  Vic Eldred    4 weeks ago

“Supermarkets say shoppers are buying more store-brand meat products and trading down from beef to less-expensive alternatives such as chicken or pork, after prices for products such as rib-eye climbed about 40% from a year ago, according to research firm IRI. Some consumers are replacing boneless chicken breast with cheaper bone-in chicken, retailers said,” reports the Wall Street Journal


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What a wise choice Biden was / S

 
 
 
Jack_TX
Junior Quiet
3.1  Jack_TX  replied to  Vic Eldred @3    4 weeks ago

It's not rocket science.

We cannot continue to create endless amounts of money and expect it to retain value.

 
 
 
Vic Eldred
Professor Principal
3.1.1  seeder  Vic Eldred  replied to  Jack_TX @3.1    4 weeks ago
We cannot continue to create endless amounts of money and expect it to retain value.

Evidently the people advising Biden never took a course in economics.

 
 
 
Nowhere Man
Junior Participates
3.1.2  Nowhere Man  replied to  Jack_TX @3.1    4 weeks ago

Absolutely correct Jack!

Force feeding the economy more and more cash devalues the cash not the commodities... A pound of beef is still a pound of beef it has the same value it has always had.... it just requires more dollars to exchange for it now that there are more dollars in circulation... It's the same reason I laugh at all the record highs they are touting in the stock market... The valuations in the market hasn't changed, it just the money amounts have more zeros behind them than before...

Democrats love inflation...

 
 
 
Sean Treacy
Professor Expert
4  Sean Treacy    4 weeks ago

Hopefully this is the end of BBB.  Criminal to add  another 1.75 trillion of kindling to the inflationary bonfire. 

 
 
 
Vic Eldred
Professor Principal
4.1  seeder  Vic Eldred  replied to  Sean Treacy @4    4 weeks ago
Hopefully this is the end of BBB.

Please God!

 
 
 
Sparty On
PhD Principal
5  Sparty On    4 weeks ago

Buckle up buttercups.   This is gonna hurt on the way up.

Double digit inflation and interest rates are on the way.   Never thought i would see this shit again but here we are.   And uncle Joe is doing his best to help make it happen.

Amazing!

 
 
 
Vic Eldred
Professor Principal
5.1  seeder  Vic Eldred  replied to  Sparty On @5    4 weeks ago

Carter got there through incompetence. Biden's handler's got there more deliberately, by following an ideology.

 
 
 
Sparty On
PhD Principal
5.1.1  Sparty On  replied to  Vic Eldred @5.1    4 weeks ago

Not completely Bidens fault but not being proactive in dealing with it is, 100% his fault.

They could put some salve on this inflation wound and slow it down.    So far he's done jack-shit.

 
 
 
Vic Eldred
Professor Principal
5.1.2  seeder  Vic Eldred  replied to  Sparty On @5.1.1    4 weeks ago

Stop spending would have been a great start, but 13 Republicans had to help them along.

 
 
 
Sparty On
PhD Principal
5.1.3  Sparty On  replied to  Vic Eldred @5.1.2    4 weeks ago

Rino's most of them.

 
 
 
Kavika
Professor Principal
6  Kavika     4 weeks ago

I wasn't aware that the current inflation is only a US problem. It seems that the world is facing the same inflation problems as the US. 

 
 
 
Greg Jones
PhD Expert
6.1  Greg Jones  replied to  Kavika @6    4 weeks ago

The topic is US inflation

 
 
 
Kavika
Professor Principal
6.1.1  Kavika   replied to  Greg Jones @6.1    4 weeks ago

Global inflation has effects on the US economy and vis versa. 

 
 
 
Jack_TX
Junior Quiet
6.2  Jack_TX  replied to  Kavika @6    4 weeks ago
I wasn't aware that the current inflation is only a US problem. It seems that the world is facing the same inflation problems as the US.

It's worse in the US than most major economies, and it's been a bigger jump, so people are feeling it more.

 
 
 
XXJefferson51
Senior Guide
7  XXJefferson51    4 weeks ago

Let’s go Brandon!  

 
 
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