Is inflation still “transitory,” as the Federal Reserve and White House like to say? Not if you’ve been visiting the grocery store, gas pump, online retailer, or anywhere else across the U.S. economy. And not judging by Wednesday’s report on consumer prices for September, which showed the same rapid rate of inflation that has been apparent this year.
The Labor Department said the consumer price index rose 0.4% in September, up from 0.3% in August. This means the price level has increased 5.4% in the last 12 months and 6.5% on an annual basis so far in 2021. This is the largest year-over-year increase since 2008, and the details in the report add to the evidence that inflation is likely to be persistent.
...Used-vehicle prices are still up 24.4% in the last 12 months, by the way, and the price of new vehicles rose 1.3% in the month and are up 8.7% for the year. Try renting a car or truck and, assuming you can find one, you’ll pay about 43% more than you did in September 2020.
Food and energy prices rose 0.9% and 1.3%, respectively. While the Federal Reserve tends to discount those two categories because they are volatile, consumers still pay for both. Beef prices are up 17.6% over the last 12 months, and fresh fish and seafood are 10.7% higher. Major appliances are 9.6% more expensive, while furniture and bedding rose 11.2%. We could go on.
...The debate over transitory or persistent inflation boils down to whether the cause is monetary or pandemic-related supply-chain shortages...
...And there’s no question the Fed has been pursuing one of the most radical monetary experiments in history since April 2020. The actions were warranted in the early pandemic days to offset the damage when the government shut down the U.S. economy. But the Fed has kept the same policies for some 19 months even as the economy has regained its pre-Covid level of GDP.
...All of this has been great news for asset holders, and many speculators, but workers are paying the price. Real average hourly earnings rose 0.2% in September but they are down 0.8% since a year ago. Real hourly earnings are down 1.9% since January when Joe Biden became President. What the progressive government giveth in transfer payments, it taketh in higher prices and real wage declines.
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