Inflation, long dormant, is rising at a faster rate than at any time in the last 40 years. Gas prices in Floyd have risen by 25 cents or more a gallon in the last four weeks. “Dollar” stores are raising their “just a dollar” items to $1.15 or more.
At grocery chains like Food Lion, prices of meat are rising dramatically. A bag of grapes that cost $1.29 a pound got for $2.49 now.
Writes Christopher Rugaber in an Associated Press report:
Stubbornly high inflation has hammered household budgets, wiped out last year’s healthy wage gains and posed a severe political challenge to President Joe Biden and Democrats in Congress. It also led the Federal Reserve to signal Wednesday that it plans to raise interest rates multiple times this year beginning in March to try to get accelerating prices under control.
The inflation figure that the government reported Friday is its personal consumption expenditures index. Though the consumer price index is a better-known barometer, the Fed tends to track the PCE in setting its interest rate policies. The PCE index tracks actual purchases consumers make each month, while the CPI follows a fixed market basket of goods.
Earlier this month, the government said the CPI jumped 7% last year, also the fastest pace in nearly four decades.
Polls and surveys say Americans are “very concerned” about high prices, but expect little help from the federal government to bring inflation under control. A report by the University of Michigan released Friday says pessimism by Americans is “at its worst level in a decade.”
“Aside from inflation, there isn’t any other justification for sentient to be so low, given the strength of the economy otherwise,” says money market economist Thomas Simons in a letter to his clients.
Others are not surprised. They look at what is called “the sentient index,” which they say is a big measure of how consumers will spend.
“The recent declines have meant that the sentiment index now signals the onset of a sustained downturn in consumer spending,” Richard Curtin, chief economist of the Surveys of Consumers, told Cable News Network.
Inflation is widely expected to fall this year as some pandemic pressures, including supply chain challenges, ease. But whether the near 40-year high from January was the peak remains to be seen.
Last week, two Democratic U.S. Senators up for re-election this year introduced a bill to suspend the federal tax on gas purchased for the remainder of this year.
“We need to continue to think creatively about how we can find new ways to bring down costs, and this bill would do exactly that, making a tangible difference for workers and families,” said Sen. Maggie Hassan of New Hampshire in a statement. The federal tax adds 18.4 cents a gallon to gas prices nationwide.
The federal proposal joins Democratic and Republican governors in several states who are offering their own plans to reduce their taxes on gas. New Virginia governor Glenn Youngkin wants to eliminate road construction taxes added in parts of the Old Dominion.
In Virginia’s General Assembly last week, the Senate Finance and Appropriations Committee killed a proposal to scale back recent gas tax increases. The vote was 12-4 with every Democrat and one Republican voting to bury the bill.
Opponents of the gas tax suspension include the American Road & Transportation Builders Association (ARTBA). They say the suspension of the tax could hurt infrastructure work planned for the near future.