Inflation said it just needed a place to crash while it got back on its feet, but now it's officially moved in.
Consumer prices rocketed higher than expected last month, jumping 6.2% annually for their biggest increase in 31 years, the Labor Department reported yesterday.
Everything from your gas bill to your breakfast is getting more expensive:
- Fuel oil prices climbed 12.3% last month and are now up 59.1% compared to last year.
- Meat, poultry, fish, and eggs increased 1.7% last month and have climbed 11.9% for the year.
There is good news for anyone planning a Miami vacation: Prices for alcohol and airline tickets fell.
How did we get here? To make a long story short, the economic reopening from the pandemic caused all sorts of disruptions, from labor shortages to supply chain bottlenecks, which have contributed to rising prices.
This is now becoming a political issue
With inflation coming in above 5% for five straight months now, many Americans are getting a little freaked out, and they are looking to policymakers for answers.
Officials are also frustrated—inflation was supposed to be a summer fling, not a serious relationship. “I had expected to see more progress by now,” Chicago Fed President Charles Evans acknowledged this week.
The Fed now believes that inflation will run hot well into next year, which has bolstered its plan to hike rates and cool down the economy. It’s already planning to reduce its monthly bond purchases that propped up markets during the pandemic.
Zoom out: Treasury Secretary Janet Yellen stressed on Tuesday that officials won’t let inflation get as out of control as it did during periods of the ’70s and ’80s. “That isn’t happening now and the Federal Reserve wouldn’t permit that to happen,” she said. But it’s being put to the test.—NF - Morning Brew