Inflation increases 5.4% from a year ago, tying 13-year high



FILE – People shop at a Johnny Was clothing store in the luxury wing of the American Dream Mall in East Rutherford, NJ on Friday, September 17, 2021. The US service industry, where most Americans work, rose again in September even as supply chain problems persisted. The Institute for Supply Management reported on Tuesday, October 5, 2021 that its monthly survey of service industries rose to 61.9, after the August reading of 61.7. (AP Photo / Ted Shaffrey, file)

WASHINGTON (AP) – Another spike in consumer prices in September pushed inflation down to 5.4% from a year ago, tying the highest rate since 2008, as the lines of Tangled global supplies continue to wreak havoc.

Consumer prices rose 0.4% in September from August as supply chain disruptions made many products scarce. The costs of new cars, food, gas and restaurant meals have all jumped.

The annual increase in the consumer price index matches the June and July readings, the highest in 13 years, the Labor Department said on Wednesday. Excluding the volatile food and energy categories, core inflation rose 0.2% in September and 4% from a year ago. Basic prices hit a three-decade high of 4.5% in June.

The unexpected explosion in inflation this year reflects significantly higher prices for food and energy, but also new and used cars, hotel rooms, clothing and furniture, among others goods and services. COVID-19 has closed factories in Asia and slowed down US port operations, leaving container ships anchored at sea and consumers and businesses paying more for goods that don’t arrive for months.

“Price increases resulting from persistent supply chain bottlenecks in a context of high demand will keep the inflation rate high, as imbalances between supply and demand are only gradually resolved. “said Kathy Bostjancic, economist at Oxford Economics, a consulting firm. “While we share the Fed’s view that this is not the start of an upward spiral in wages and prices, we expect inflation to remain consistently above 3% until in mid-2022. ”

The higher prices also exceed the wage gains that many workers can get from companies, which have to pay more to attract employees. Average hourly wages rose 4.6% in September from a year earlier, a healthy increase, but not enough to keep up with inflation.

Gas prices jumped 1.2% last month and are up more than 42% from a year ago. Electricity prices rose 0.8% in September from August.

Supply chain disruptions continue to push up new car prices, which were up 1.3% last month and 8.7% from a year ago, the largest increase in 12 months since 1980. A semiconductor shortage has dampened vehicle production and left fewer cars at the dealership a lot.

Used car prices, which soared this summer as Americans scrambled to buy them when they couldn’t find new cars, fell for the second month in a row. Clothing costs also fell, falling 1.1%.

Housing costs have also risen at a steady pace, as builders say they can’t find all the parts and workers they need to build new homes as quickly as they would like. Rents rose 0.4% in September and a measure of home prices also rose 0.4%. If sustained, these increases will put significant upward pressure on prices, as these two measures account for almost a third of the CPI.

Rapid price increases have increased pressure on the Federal Reserve, which has set its benchmark interest rate near zero to stimulate more borrowing and spending. Yet inflation is well above its 2% target. President Jerome Powell has repeatedly stated that price gains are expected to “weaken” next year, bringing inflation closer to target.

Fed Vice Chairman Richard Clarida echoed this view on Tuesday.

“The untimely surge in inflation this year, once these relative price adjustments are completed and the bottlenecks resolved, will ultimately prove to be largely transient,” he said.

Raphael Bostic, chairman of the Atlanta Federal Reserve, joked Tuesday in separate remarks that “transient” is now seen as the equivalent of a curse at the Atlanta Fed. Bostic said the price spikes primarily reflect the impact of the pandemic on supply chains and added that they are likely to fade away eventually, but that will likely take longer than many Fed officials say. had originally planned.

Price gains are also a vulnerability for President Joe Biden, who has come under attack from Republicans for boosting inflation with his $ 1.9 trillion bailout passed in March of this year.

The White House said on Wednesday it helped secure an agreement to keep the Port of Los Angeles open 24 hours a day, seven days a week, in a bid to alleviate bottlenecks and reduce price pressures.

About Nell Love

Check Also

Tales of 5 Orlando Roller Coasters

Central Florida is on a roll with its coasters. Epcot’s new Guardians of the Galaxy: …

Leave a Reply

Your email address will not be published.