: Good luck escaping inflation — the biggest contributors to the 31-year high include rent, gas and groceries
Behold the evil villain, inflation, stomping down the street chasing after your wallet. You can run from him — but you surely can’t hide.
That was what the message that the latest Consumer Price Index report, released Wednesday, conveyed to millions of Americans.
The index rose by 0.9% in October — pushing the pace of inflation over the past year to 6.2% — a 31-year record high.
Aside from airplane fares and alcoholic beverages, which fell by 0.7% and 0.2%, respectively, just about every other category the Bureau of Labor Statistics tracks in the CPI report either saw price increases or didn’t change from September.
The biggest price increases Americans saw last month stemmed from fuel oil, tickets to sporting events and motor fuel, which cost 12.3%, 8.3% and 6.1% more, respectively.
Here’s what moved CPI last month
Transportation — which includes new and used vehicles — rose by 2.4% last month, but contributed to more than 40% of the overall CPI gain.
The overarching energy index — which includes fuel oil and motor fuel — rose by 4.8% last month, contributing nearly 40% to the overall increase in CPI.
In October, the shelter index rose by 0.5% — accounting for nearly one-fifth of the overall increase.
More specifically, owners’ equivalent rent — the amount homeowners would receive from renting their home — rose by 0.4%, after rising by the same amount in September. And rents of primary residences rose by 0.4% after rising by 0.5% in September — making it the largest back-to-back gain since 1987.
“‘There is increasing evidence that inflationary pressures are broadening out, underlining that inflation will remain elevated for much longer than Fed officials expect.’”
— Andrew Hunter, senior U.S. economist, at Capital Economics
Food prices — which includes foods consumed at home and at restaurants — rose by 0.9% last month, contributing to 14% of the overall CPI increase.
Federal Reserve Chairman Jerome Powell believes that inflation will cool down as the economy continues to recover from the pandemic-induced recession. But Wednesday’s report casts doubts, economists said.
The report demonstrates that “there is increasing evidence that inflationary pressures are broadening out, underlining that inflation will remain elevated for much longer than Fed officials expect,” said Andrew Hunter, senior U.S. economist, at Capital Economics.
Those pressures are coming from labor shortages, supply chain issues and stimulus measures that injected more money into the economy during the pandemic.
The fact that inflation isn’t slowing down is broad-based “should be a concern for Fed policymakers (a sign that higher inflation may be becoming more widely rooted),” said Scott Brown, chief economist at Raymond James Financial.