US Inflation is the Highest in Three Decades
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A ’90s fashion renaissance in the last couple of years has brought back the coolest trendsetters outfitted in once-forgotten bumbags, chokers, pastel silky slip dresses, tattered jeans, and Doc Martens.
On Wednesday, one of the more unpleasant relics of that grungier era reared its ugly face: inflation levels not seen since 1990. Consumer prices in the US were 6.2% higher in October than they were a year ago, the Labor Department announced. Maybe Universal should re-release Nevermind with the baby on the cover chasing a $5 bill.
High levels of inflation, originally dismissed by some economists as a blip, have been annoyingly persistent this year. It’s been five straight months of 5%+ year-on-year consumer price increases, driven by a lightspeed-but-uneven economic recovery from the pandemic. Trillions of dollars in stimulus, low-interest rates, and strong household wealth have created strong demand and boosted prices, especially when coupled with global supply-chain bottlenecks.
According to the Labor Department, the latest inflation hit just about everywhere — new and used cars, furniture, rent, and healthcare all got more expensive in October. The only things that got cheaper were airline fares and alcohol, so book a holiday and grab a mojito after you’ve finished reading these other important details:
- The core price index, a figure that leaves out volatile food and energy prices, climbed 4.6% in October from a year earlier, the most since 1991. That’s the clearest confirmation that the cost of living is overheating.
- Food cost 5.3% more than a year ago — meat, poultry, fish, and eggs are up 11.9% — while fuel oil prices are up a whopping 59.1% in the past year and overall energy prices are up 30%.
Here, There, Everywhere: Last month, China’s producer price index, which measures inflation at the point of manufacturing, rose 13.5%, the most in 26 years, and in Brazil, year-over-year inflation accelerated to a shocking 10.67%.
Interest-ing Times: There will now be pressure on the Federal Reserve to raise interest rates or speed up its tapering of stimulus. A longer-term solution could be technology: Morgan Stanley data shows that, excluding short-term jumps, commodity prices have been going down for 200 years because every time an energy source becomes too expensive, a new one gets invented (cue renewables).