Inflation burst reflects higher prices
Price increases make biggest jump in 13 years
Another jump in consumer prices last month sent inflation up 5.4% from where it was a year ago, matching the largest increase in 13 years.
Excluding the volatile food and energy sectors, core inflation rose 0.2% in September and 4% compared with a year ago.
The unexpected burst of inflation reflects sharply higher prices for food and energy, but also for furniture, cars, televisions and many imported goods.
Consumer prices rose 0.4% in September from August as the costs of rent and goods climbed.
COVID-19 has 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 may not arrive for months because there aren’t enough people to unload ships or truck drivers to take goods to their destinations.
“The pandemic has affected the supply of goods, causing prices to rise,” said Michael Klein, professor of international economics at Tufts University’s Fletcher School.
The annual increase in the consumer price index matched readings in June and July as the highest since 2008, the Labor Department said Wednesday. The consumer price index is a measure of the average change over time in the prices paid by urban consumers for goods and services.
The ongoing price gains raise pressure on the Federal Reserve, whose officials have repeatedly said the increases will be temporary, and on President Joe Biden, who is facing an economy of slowing job gains and higher inflation. Republicans have accused Biden of spurring inflation with his $1.9 trillion rescue package enacted in March.
“Price increases stemming from ongoing supply chain bottlenecks amid strong demand will keep the rate of inflation elevated, as supply (and) demand imbalances are only gradually resolved,” said Kathy Bostjancic, an economist at Oxford Economics, a consulting firm.
Higher prices are also outstripping the pay gains many workers are able to obtain from businesses.
Average hourly wages rose 4.6% in September from a year earlier, a healthy increase, but not enough to keep up with inflation.
For elderly Americans, however, the increase has resulted in the biggest increase in benefits in 39 years. Monthly Social Security checks will rise 5.9% next year, the government said Wednesday. So will other benefits for veterans and retirees.