Consumer Prices Has Inflation Hotter Than Expected In September

Consumer Prices Has Inflation Hotter Than Expected In September

Americans are being slammed with a national pay tax in the form of inflation

Mona Salama
Mona Salama
|
October 13, 2021

Consumer prices surged more than expected in September, showing that inflation was coming in hotter and matching the largest annual gain for a 13-year high, the Bureau of Labor Statistics reported Wednesday.

The Consumer Price Index (CPI) — a vital indicator used to measure the U.S inflation rate rose 0.4% from August to September. That exceeded the projected forecast of a 0.3% gain from economists surveyed by Bloomberg and Dow Jones. On a year-over-year basis, the all items index climbed 5.4 percent, expedited from the pace seen in August. Economists estimated a 5.3% increase.

The “core” CPI increased by 4.0% since last month, the same increase it also saw year-over-year. The food index rose by 4.6%, while the energy index rose by 24.8% over the last twelve months. Year-over-year prices for groceries, gasoline, new vehicles, and other items had all rose notably compared to last month. In September, the indexes for food and shelter contributed more than half of September’s total CPI increase.

Food prices rose by 0.9% in September, the largest monthly gain since April 2020. Food prices overall rose 4.6% since September 2020. The index for food at home jumped by 1.2%, while the food away from home index rose by 0.5% over the month

Shelter prices, which track rent and hotel costs, which also make up about a third of the CPI, increased 0.4% for the month and twice as big an increase annually. However, the soaring house prices and drastic increase in hotel prices contribute to the dramatic rising inflation pressure.

Energy prices rose the most among major spending categories in September. Fuel costs jumped 3.9%, rebounding from a 2.1% slide it had in August. Utility gas services shot to 2.7%, the second-largest jump of any CPI index category. Gasoline prices rose another 1.2 percent for the month, bringing the annual increase to 42.1%.

Inflation jumped early in 2021 due to increased prices in airfares, used vehicles, and apparel. However, in September, all three of those indexes saw their prices declining. Apparel prices dropped 1.1% for September, while airline fares declined by -6.4%. Both indexes have been rising consistently but showed annual gains of 3.4% and 4.4%, respectively.

Used car prices, which counted for one-third of the inflation pressures surge since July, fell 0.7% in September. Despite the prices sliding from August’s 1.5% slump and putting the 12-month increase to drop to 24.4 percent, it indicated overall that this specific category isn’t contributing to the continued inflation surge like before.

Federal Reserve chair Jerome Powell has repeatedly stuck to the narrative that the abnormally surge in inflation was “transitory.” Powell attributed the inflation surge largely to the supply chain crisis, another dilemma plaguing the Biden administration. However, Powell’s view on inflation being transitory has been substantial pushback for weeks by many CEOs and investors, as well as regional Fed presidents who have called on the Central Bank Chair to start pulling back on its economic support in buying $120 billion in bonds assets monthly to keep interest rates near zero.

The September FOMC minutes from the last meeting released Wednesday afternoon revealed Fed officials are preparing to pull the trigger in slowing their buying program as soon as November or definitely in December. The Sept. 21-22 meeting indicated that “if a decision to begin tapering purchases occurred at the next meeting, the process of tapering could commence with the monthly purchase calendars beginning in either mid-November or mid-December.”

The news of the persistent price surge pushed the Social Security Administration shortly after the CPI report to increase benefits for over 70 million older Americans to 5.9 percent in 2022.  The increase, known as a cost-of-living adjustment, is tied to rising inflation is the biggest bump in almost four decades. Seniors depending on SSI checks and spend more on groceries, rent, and prescription drugs; three major indexes pressure the inflation rate due to its highest prices. And for those who live in seasonally changed areas, this winter is seen to hit the pocketbook of the senior as the surge in oil and natural gas prices, the biggest cause of the inflation rate.

Sen. Rick Scott (R-FL) highlighted September’s CPI report “fueled by the Biden administration’s tax-and-spend agenda” in calling for the implementation of “substantive fiscal reforms to end the ongoing inflation crisis.”

“Joe Biden and Democrats are leading our nation down a dark economic path of fewer jobs, higher prices, and less opportunity. The question is, how many months will Joe Biden’s complete ignorance go on before he realizes his socialist agenda is killing our economy and hurting American families?” Scott said in a statement.

“Joe Biden’s presidency has been an unmitigated disaster for families and businesses. He has failed them over and over. The American people have had enough. I won’t let Joe Biden and his systemic socialism kill the American Dream.”

Mona Salama

Mona Salama

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