The trend of high inflation rates over the past few months looks all set to continue through October, according to a recent estimate by the Federal Reserve Bank of Cleveland.
October’s Consumer Price Index (CPI), a measure of inflation, is predicted to be up by more than 0.8 percent from September, the Fed’s “Nowcast” inflation forecast shows. Core CPI, which excludes food and energy, is expected to be up by 0.54 percent. The Fed projects annual CPI to be at 8.14 percent in October, with core CPI at 6.58 percent.
Data from the U.S. Bureau of Labor Statistics show that annual CPI has remained above 7.5 percent for every single month this year. It peaked at 9.1 percent in June, and was at 8.2 percent in September.
The continuous high inflation rate under the Biden administration is eroding people’s incomes. According to a report by the Federal Reserve Bank of Dallas, 53.4 percent of American workers had their inflation-adjusted real wages decline between second quarter 2021 and second quarter 2022.
“For the 53.4 percent of such workers in second quarter 2022, the median decline (that is, half of the declines were larger and half smaller) in real wage growth was 8.6 percent,” the report said.
Meanwhile, the 12-month Producer Price Index (PPI), a measure of annual wholesale inflation, jumped 8.5 percent in September. Experts are worried about elevated PPI keeping consumer prices up.
“September’s larger-than-expected rise in producer prices adds to concerns that inflation has become more entrenched, even as certain commodity prices decline and supply shocks ease,” economist Eliza Winger said, according to Bloomberg.
Fed Action, Election Issue
The Federal Reserve has implemented five consecutive rate hikes, including three hikes of 0.75 percentage points. However, inflation continues to remain high.
Federal Reserve Chair Jerome Powell has said that the central bank intends to bring inflation down to its target rate of 2 percent, and will keep raising interest rates until it happens. But as interest rates keep rising, consumer spending can take a hit, which sours the prospect for economic growth.
Ahead of the November midterms, Sen. Roger Marshall (R-Kan.) has slammed the Biden administration for its failure to control inflation.
“Kansans and all Americans are currently paying 13.5 percent more since … Joe Biden took office. In turn, we see lower wages, savings accounts being drained, and the cost of living more expensive across the board,” he said in a statement.
“The American people can no longer afford the financial anxiety and failing economic agenda of Joe Biden. To truly put an end to this crisis, we must put an end to Democrats’ reign in Washington, D.C.”