Milwaukee, Wisconsin 2021-10-13 09:56:00 –
By CHRISTOPHER RUGABER
AP Economics Writer
Washington (AP) — Inflation rose to 5.4% from a year ago due to another surge in consumer prices in September. This is comparable to the highest inflation rate since 2008, as the intertwined global supply lines continue to cause havoc.
Consumer prices rose 0.4% from August in September due to a shortage of many commodities due to supply chain disruptions. The cost of new cars, food, gas and restaurant meals has all skyrocketed.
According to the Ministry of Labor, the annual rise in the consumer price index was the highest in 13 years, consistent with June and July measurements. Excluding the volatile food and energy categories, core inflation rose 0.2%.
4% compared to September and a year ago. Core prices reached a 30-year high of 4.5% in June.
This year’s unexpected surge in inflation reflects the surge in food and energy prices, but also reflects goods and services such as new and used cars, hotel rooms, clothing and furniture. COVID-19 has closed factories in Asia, delayed US port operations, anchored container ships at sea, and consumers and businesses are paying more for goods that haven’t arrived for months.
Cathy Bossjanchich, an economist at consulting firm Oxford Economics, said, “Price increases due to ongoing supply chain bottlenecks in strong demand will only gradually resolve supply-demand imbalances. Will continue to raise inflation. ” “We share the Fed’s view that this is not the beginning of a rising wage spiral, but we expect inflation to continue to exceed 3% by mid-2022.”
Higher prices also outweigh the wage benefits that many workers can get from companies that have to pay more to attract employees. Average hourly wages in September rose 4.6% year-on-year, a healthy rise, but not enough to keep up with inflation.
Gas prices rose 1.2% last month, jumping more than 42% compared to a year ago. Electricity prices in September rose 0.8% from August.
Due to supply chain turmoil, new car prices continued to rise, rising 1.3% last month and up 8.7% year-on-year. This is the largest 12-month rise since 1980. Due to a shortage of semiconductors, car production is curtailed and fewer cars remain in dealers. a lot.
The price of used cars, which soared this summer, fell for the second straight month as Americans tried to buy them when they couldn’t find a new one. Clothing costs have also fallen 1.1%.
Housing costs have also risen significantly as builders say they can’t find all the parts and workers needed to build a new home as quickly as they want. Rents rose 0.5% in September and home price indicators rose 0.4%. These two indicators make up almost one-third of the CPI, so if these rises persist, there will be significant upward pressure on prices.
Rapid inflation put pressure on the Federal Reserve, which fixed benchmark rates at near zero and encouraged more borrowing and spending. However, inflation is well above the target of 2%. Jerome Powell reiterated that next year’s inflation should “weaken” and bring inflation closer to its target.
In a statement on Tuesday, Fed Vice-Chair Richard Clarida reiterated that view.
“This year’s unwelcome surge in inflation will eventually be largely temporary once these relative price adjustments are completed and the bottlenecks are resolved,” he said.
President Raphael Bostic of the Atlanta Federal Reserve joked Tuesday in another statement that “temporary” was considered the equivalent of a curse in the Atlanta Federation. Bostic said the price surge was primarily a reflection of the pandemic’s impact on the supply chain and should eventually decline, but more than many Fed officials initially expected. It is likely to take time.
The rise in prices is also vulnerable to President Joe Biden, who has been attacked by the Republicans for spurring inflation with the $ 1.9 trillion bailout package enacted in March this year.
The White House said Wednesday that it helped promote an agreement to keep the Port of Los Angeles open 24 hours a day, 7 days a week to ease supply bottlenecks and reduce price pressures.