US inflation continues to rise, punishing everyday Americans with higher prices at the stores as huge tangles in the global supply chain limit the movement of key goods.
Consumer prices rose 0.4 percent last month, slightly higher than August’s gain and pushing annual inflation back to its highest increase in 13 years, the Labor Department said on Wednesday.
The consumer price index rose 5.4 percent in September from a year ago, up slightly from August’s gain of 5.3 percent and matching the levels seen in June and July.
Excluding the volatile food and energy categories, core inflation rose 0.2 percent in September and 4 percent compared with a year ago. The core inflation number hit a three-decade high of 4.5 percent in June.
The consumer price index rose 5.4 percent in September from a year ago, up slightly from August’s gain of 5.3 percent and matching the increases in June and July
Supply chain bottlenecks have led to empty shelves and high prices for American consumers. Above, bare shelves are seen at a Walgreen’s in Minneapolis on October 9
The dramatic burst of inflation this year reflects sharply higher prices for food and energy, but also new and used cars, hotel rooms, airplane tickets, appliances and furniture, among other goods and services.
Food and rents accounted for more than half of the increase in the CPI in September, with rental costs up 2.4 percent and owner’s equivalent rent rising 2.9 percent.
Overall prices for food at home rose 4.5 percent, with meat up 10 percent, eggs up 13 percent, and fresh fruit rising 5 percent from a year ago.
Energy prices soared 24, with gasoline rising 42 percent and natural gas up 20 percent on the year amid a standoff between Russian President Vladimir Putin and the European Union over the Nord Stream 2 pipeline.
A semiconductor shortage continues to raise the prices of cars and major appliances. New cars and trucks are up 9 percent and washing machines have risen 19 percent.
Used car prices have eased off their peaks, however, with prices falling 3.7 percent from August, but still up 24 percent from a year ago.
The lingering surge in prices, which President Joe Biden and Federal Reserve Chair Jerome Powell have repeatedly dismissed as ‘transitory’, comes as huge bottlenecks in the supply chain disrupt the flow of goods to consumers.
Prices are up on a wide range of key goods as high inflation continues to hit US consumers
Pork and beef products are displayed on a shelf at a Safeway store on October 4 in San Francisco. Meat prices have jumped 10 percent and beef is up a shocking 17 percent
A shortage of truckers and warehouse workers has severely impacted commerce across the country, leaving many store shelves chronically empty of certain items.
COVID-19 has also shut down factories in Asia and slowed U.S. port operations, leaving container ships anchored at sea and consumers and businesses paying more for goods that don’t arrive for months.
Biden on Wednesday reached a deal with unions and business leaders from Walmart, FedEx, UPS and others to expand operations at one of the country’s largest shipping ports in a bid to ease supply chain bottlenecks ahead of the holiday season.
Once implemented, the proposed changes could increase output by more than 3,500 shipping containers per week, White House officials said.
Under the new agreement the Port of Los Angeles will join the Port of Long Beach in working around the clock to speed the flow of goods. Biden will officially announce the initiative on Wednesday afternoon.
Higher prices are also outstripping the pay gains many workers are able to obtain from businesses, who are having to pay more to attract employees.
Average hourly wages rose 4.6 percent in September from a year earlier, a healthy increase, but not enough to keep up with inflation.
Federal Reserve Chair Jerome Powell has repeatedly dismissed inflation as ‘transitory’
Biden on Wednesday reached a deal with unions and business leaders from Walmart, FedEx, UPS and others to expand operations at one of the country’s largest shipping ports
Rising inflation has emerged as the Achilles’ heel of the economic recovery, erasing much of the benefit to workers from higher pay.
It has also heightening pressure on the Federal Reserve’s policymakers under Chair Jerome Powell, who face a mandate to maintain stable prices.
In response to criticism, Powell and the White House have said they believe that the pickup in inflation, which well exceeds the Fed’s 2 percent annual target, will prove temporary because it stems mainly from supply shortages.
Many economists agree that the primary drivers of higher prices have been categories of goods and services that were most disrupted by the pandemic.
But other inflationary trends could prove more long-lasting. Rents, for example, are rising again in many big cities after having dropped during the pandemic.
‘Today’s number, with food price inflation and shelter inflation moving higher, suggests growing pressure on consumers,’ Seema Shah, chief strategist at Principal Global Investors, told Reuters.
‘Keep in mind too that the recent rise in oil prices hasn’t yet fed through to the numbers – that’s still to come, while the renewed rise in car prices is also likely to drive inflation numbers higher in the coming months,’ added Shah.
The September inflation figures do not include the latest surge in oil prices, which will likely help drive prices further in future reports.
Oil prices jumped on Monday to the highest levels in years amid a rebound in global demand after the pandemic. Though Brent crude futures fell on Wednesday, prices remained above $80 a barrel.
Container cargo ships sit off shore from the Long Beach/Los Angeles port complex in Long Beach, California on October 6 as a huge backlog at the port leaves ships idle
With roughly 70 percent of all US retail goods shipped by truck, rising gas prices have the potential to impact consumer prices broadly.
In addition, rising wages are putting pressure on businesses to jack up prices for consumers and pass along their rising costs.
The government reported last week that average hourly earnings increased by the most in seven months on a year-on-year basis in September because of worker shortages.
With the number of people voluntarily quitting their jobs hitting a record high in August and at least 10.4 million unfilled positions, wage inflation is set to rise further.
‘The right place to look for inflation is not just in the so-called inflation data itself, but also in the tighter labor market and associated wage growth,’ Andrew Hollenhorst, chief U.S. economist at Citigroup in New York, told Reuters.
‘Firms confident of passing on input costs may make higher energy prices a driver of broader inflation.’
Biden’s Social Security Administration will give around 70 million retirees a 5.9% boost in payments in the biggest cost of living adjustment in 39 years to keep up with rising inflation
Millions of retirees will see a significant boost to their Social Security checks as the Biden administration gave its cost of living adjustment (COLA) the most significant boost in nearly 40 years.
Social Security checks will raise 5.9%, about $92 for the average retired worker, in a shocking display of inflation. For the last 10 years, an inflation lull has led to checks that rise only 1.65% per year on average.
The Social Security Administration has not raised benefits so drastically year-over-year since 1982.
A typical retired worker will now receive $1,657 a month starting next year while a typical couple’s benefits will rise $157 to $2,753 per month.
To account for the added cost to taxpayers, the Social Security tax will be applied to earnings up to $147,000 in 2022, up from $142,800 this year.
The COLA affects nearly 1 in 5 Americans, 70 million people in total, including Social Security recipients, disabled veterans and federal retirees. About half of seniors live in a household where Social Security accounts for at least half of their income, and one-fourth say they rely on the checks for nearly all of their income.
At the same time, the Medicare Part B premium is expected to rise from $148 per month by about $10.
Prices across the US have risen at the fastest rate in nearly a decade as federal stimulus has pumped trillions into the economy to increase consumer demand at a time when the supply chain for common household goods has been severely disrupted by the pandemic.