Inflation is not inching up. It’s climbing the wall with abandon. In the past three weeks, gas in Floyd has climbed to over $3 a gallon for regular to $3.19 and is expected to go higher.
At Food Lion, a bag of seedless grapes that cost 99 cents a pound at the beginning of last week was $2.49 by the end. Chicken and snacks from their food bar now cost $7.95. It used to be $5.95. A friend says her rent has nearly doubled on a house that needs a lot of repair.
Consumer price increases now has inflation at 5.4% and rising, the highest price hikes in 13 years, says the U.S. Department of Labor. The rising prices will easily wipe out a planned Social Security hike of 5.9% in payments due to arrive in February of next year (the raise takes effect in January, but SS checks come a month afterwards).
“Price increases stemming from ongoing supply chain bottlenecks amid strong demand will keep the rate of inflation elevated, as supply (and) demand imbalances are only gradually resolved,” Kathy Bostjancic, an economist at Oxford Economics, a consulting firm, tells The Associated Press. “While we share the Fed’s view that this isn’t the start of an upward wage-price spiral, we look for inflation to remain persistently above 3% through mid-2022.”
The unexpected burst of inflation this year reflects sharply higher prices for food and energy, but also for furniture, cars, televisions, and other largely imported goods. COVID-19 has shut down factories in Asia and slowed U.S. port operations, leaving container ships anchored at sea and consumers and businesses paying more for goods that may not arrive for months.
The annual increase in the consumer price index matched readings in June and July as the highest in 13 years, the Labor Department said Wednesday. Excluding the volatile food and energy categories, core inflation rose 0.2% in September and 4% compared with a year ago. Core prices hit a three-decade high of 4.5% in June.
On the other hand, there is some good news as the news report continues:
One good sign in September was that prices fell or moderated in categories that had been initially pushed much higher by the pandemic. Those declines kept core price increases from worsening.
Used car prices declined 0.7% last month, the second straight drop, after costs soared over the summer as consumers, unable to find or afford a new car, turned to used instead.
The costs for hotel rooms, car rentals, and airline tickets also all fell last month, as the delta spike in COVID-19 cases limited travel plans. Car rental prices had shot up over the summer after many companies sold portions of their rental fleets. Clothing prices fell 1.1% in September, providing consumers some relief after increases earlier this year.
No so for new vehicles. New car prices rose 8.7 percent so far this year. Household furniture costs are up 11.2% since this time last year, the highest hike in prices since 1951.
Prices continue to rise at restaurants as costs have gone up over the last five months, an “unprecedented leap for as long as records shave been kept,” says the National Restaurant Association.
Yet we continue to be told that this is all “transitory” and “temporary.”
“The unwelcome surge in inflation this year, once these relative price adjustments are complete and bottlenecks have unclogged, will in the end prove to be largely transitory,” says Fed Vice Chair Richard Clarida.
Likewise, Federal Reserve Chair Jerome Powell keeps claiming the price hikes “will abate next year.”
But Raphael Bostic, president of the Atlantic Federal Reserve, says the word “transitory” is now “the equivalent of a curse word in their offices and that any abatement “will likely take longer than many Fed officials initially expected.